Partial unemployment: is the extension a good idea?

This Wednesday, the Prime Minister announced the extension of partial unemployment. A generous measure that benefits both employers and employees. But is it really relevant?

Partial unemployment costs more than a billion euros per month, to the State and to Unedic, it is considerable, so indeed the debate deserves to be asked. Should we extend it? How long ? But curiously, this debate is completely ignored.

Why ?

It must be said that partial unemployment suits everyone: it avoids plans for massive layoffs since it is the community that supports most of the wages. It is therefore aid for businesses and protection for employees who, thanks to this, keep their jobs. It is also understandable that in a context of at least very uncertain recovery and strong surge in unemployment, the government is reluctant to disconnect the device. It will therefore be extended until November 1 and even more for the sectors most affected by the crisis.

But how is this open to criticism?

First of all, there is a risk of morphine effect: this system keeps companies afloat which should restructure but which postpone the deadline, they are sometimes called "zombie companies". This is not a good thing because it often only delays a fatal deadline and it swallows up a lot of public money that could have been better invested than in the artificial survival of a company already in bad shape before the crisis. In Germany, the Committee of Five Wise Men, which includes five well-listened economists, raised the issue and criticized the Merkel government's choice to extend short-time working. Moreover there, it was extended by two years, until the end of 2021, which suggests that in France, we will also probably go beyond the deadlines set yesterday by the Prime Minister.

But despite this "morphine effect", is this a reason to stop short-time working sooner?

Stop it sooner no, we are not the United States, a country where we accept a massive increase in unemployment and a lot of bankruptcies, betting that the rebound will be faster. We don't have that liberal mindset. However, nothing prevents better control of partial unemployment. Because this is the other criticism that can be made to this extremely expensive device: some companies, especially in services, abuse the system by continuing to employ employees who are officially on partial unemployment. A generous system inevitably creates temptations.