- To stem the anticipated rise in youth unemployment, the executive has announced a boost of 4,000 euros for companies that hire a young person under the age of 25. A device that will apply "from July", detailed the Minister of Economy, Finance and Recovery Bruno Le Maire this Thursday.
- This type of measure is not unknown to the public authorities. For over 20 years, successive governments have regularly used premium reductions to support employment.
- If economists recognize the interest, in times of crisis, of putting in place such a boost on youth employment, they warn of the extent of their impact, which may disappoint. Especially since controversies still exist on these subjects.
Avoid the "sacrificed generation". Particularly concerned about the future consequences of the crisis on youth employment, the new government has drawn up a new measure to maintain their chances of entering the labor market.
After learning aids announced in June, give way to another financial boost: in the case of hiring a young person under 25, employers will benefit from an “exceptional device for reducing the cost of work ", Up to 4,000 euros per year and for a period of at least one year, said Wednesday the new head of government, Jean Castex, during his statement of general policy.
A known recipe
The subject will be raised this Friday by the Prime Minister with the social partners, to refine his "plan for youth". "It is a very generous device but which, I hope, will be very effective," added this Thursday on France Inter the Minister of the Economy, Bruno Le Maire, announcing its application "from July". His reasons for hope are drawn from past experiences. “Dividend Juppé” of 1995, “Fillon reduction” of 2002, CICE under Holland, transformed into a drop in perennial expenses under the Macron quinquennium… For twenty years, successive governments have continuously reduced the cost of labor for in general, with the key, job creation.
In a report published in January 2019, the Economic Analysis Council therefore recommended, in order to create jobs, "to privilege targeted exemptions on low wages and to eliminate all charges at the level of the minimum wage". From this point of view, the aid provided by the government, reserved for the hiring of young people up to a limit of 1.6 times the minimum wage (or 2,433 euros gross monthly), fits into this category. “We have a body of work which shows that there is a sensitivity of youth employment to the cost of work. Reduction measures can have an additional effect. The so-called "young" measures compensate for their lack of experience, "explains Yannick L'Horty, professor at Paris-Est Marne-La-Vallée University and co-author of the report , to 20 Minutes .
No harm… but no miracle
In the context of the economic crisis, this measure cannot do any harm. "We do not drink a donkey that is not thirsty, but in times of recession, this type of incentive can help companies to overcome the cap," confided recently to the monthly economic Alternatives OFCE economist Eric Heyer. According to him, a measure targeted at hiring permanent contracts for qualified young people, and on all types of contracts for less qualified young people, is of interest, but on condition that this policy is supplemented by "a catalog of devices" including subsidized jobs.
However, these policies aimed at lowering premiums also do not work miracles. "We are also in a context where we have already used the exemptions from charges so much that they are likely to have less effect," says Yannick L'Horty. The government measure will certainly "cushion and limit the foreseeable increase in youth unemployment. But the question is whether this supplement will be enough to change the behavior of employers, who also have problems with economic opportunities ”. In 2017, France Stratégie estimated that the proportion of 18-24 year olds whose employment did not give rise to any exemption from contributions was only 17%.
The subject remains debated among economists. A Dares study dating from 2017 concluded that the "zero charges" system, implemented for very small businesses in 2008 to support the hiring of low-skilled employees, "would have had little effect on the number of hires " Conversely, a note published in 2014 by the Institut Montaigne described significant effects on employment.
Strangers
Based on the Swedish example - where in 2007 and 2009, social security contributions for the employment of young people were reduced - a report by France Stratégie also calls for caution. In this case, studies conclude that there are "positive but weak effects on the employment of young people", their authors putting forward the hypothesis of a labor cost "probably still too high (...) for young people with the least qualifications and the least experienced ”. Enough to give water to the mill of the promoters of a young Smic, an idea sometimes supported to the right of the political spectrum.
Returning to the French case, the authors of the report finally acknowledge that they know "little about the nature of the jobs created or saved by sex, age, diploma, socio-professional category, [or] experience".
Windfall effects
Another downside of these policies is on the side of their potential perverse effects. The first is the windfall effect, which designates those companies that would have hired anyway even without the aid.
On this subject, the "youth contract" system (2002-2007) which subsidized the employment of young people provided for a monthly bonus for three years, was singled out by the Court of Auditors. “In almost 50% of the cases, the aid [was] paid to employers who, without it, would have made the same hiring decisions; thus, 54% of beneficiaries were already salaried before hiring and 31% worked for the same employer ”, she emphasized then.
With government assistance, this risk has not gone away. “If the measurement is automatic, there is a risk of deadweight. We risk watering, even in places where there is no fire, ”admits Yannick L'Horty. But by being of this nature, it can also resolve the problems of non-use of aid, which is often a problem, as in the case of open jobs (subsidies for hiring young people in priority neighborhoods).
Complicated for those over 25?
“Threshold effects” are the other possible consequence of contribution holidays. "By setting a limit at 1.6 times the minimum wage, this can complicate the hiring of young people beyond [this level of remuneration] or penalize wages", continues the economist. As for the age limit, "it can complicate matters for young people aged 25 to 30, even if these categories, who already have professional experience, are a little more protected in the face of the deteriorating situation. employment ”. But here again, the specialist invites us not to overestimate this risk: "the state of the art does not indicate that it has been proven". Not enough then, according to him, to invalidate the idea of the government.
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- Jean Castex
- Covid 19
- Employment
- Youth
- Economy