420,000 job seekers receiving additional benefits, 670,000 salaried jobs destroyed, a deficit of 18.7 billion euros: the forecasts of Unédic, responsible for the unemployment insurance scheme, for the year 2020 are worrying.

Bertrand Martinot, economist at the Institut Montaigne, deciphers them on Europe 1.

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Unédic, in charge of the unemployment insurance scheme, revealed its forecasts for the year 2020 on Wednesday, marked by the Covid-19 health crisis.

It provides for the compensation of 420,000 additional job seekers at the end of 2020, due to the destruction of 670,000 salaried jobs.

The organization should also face an unprecedented deficit of 18.7 billion euros, against nearly 9 billion the previous year.

Disturbing figures, even if they are more optimistic than the first revealed which provided for the destruction of 900,000 salaried jobs.

Economist at the Institut Montaigne and specialist in the labor market, Bertrand Martinot deciphers these forecasts for Europe 1. 

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670,000 salaried jobs destroyed

This figure is a forecast, recalls Bertrand Martinot, moreover more optimistic than that of INSEE.

"INSEE is already more pessimistic about the year 2020, since it is already at 728,000 job losses because INSEE, after a strong rebound in employment in the third quarter, anticipates a further deterioration in employment at the end of the year, in the fourth quarter of 2020, ”he explains. 

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The impact of the unemployment insurance reform 

For a comprehensive understanding of the figures, it should be remembered that not all job seekers are compensated by unemployment insurance.

"It's about less than half," said Bertrand Martinot.

Another factor: the reform of unemployment insurance, desired by the government but postponed due to the Covid-19 epidemic.

In its forecasts, Unédic anticipated the entry into force of the reform on January 1, 2021.

"In financial terms, forecasts are relatively optimistic because this reform, which restricts unemployment rights since it restricts the conditions for entitlement. If the reform were applied on January 1, 2021, it would reduce the number of unemployed people receiving benefits. compared to those who would be without the reform, ”analyzes the economist.

A deficit of 18.7 billion for Unédic

The structure in charge of unemployment insurance forecasts a deficit of 18.7 billion euros, double the previous year (9.7 billion).

"You have three sources of widening the deficit", decrypts Bertrand Martinot.

"You have a drop in revenue, because you have a decrease in the wage bill, therefore in contributions. Second element is that you have an increase in the unemployed, including the unemployed receiving benefits, so you have more benefits. pay and more expenses. "

These two factors "automatically" lead to a deficit in unemployment insurance, according to the economist.

"It is quite normal that in times of serious crisis the deficit of Unédic is widening". 

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"On the other hand, you have practically 60% of the widening deficit which is due to a totally exceptional factor", assures the economist.

"Unédic co-finances with the State, to the tune of a third, the partial activity allowances, which took considerable proportions during the year 2020 and which will continue to weigh in 2021."

In June, partial activity concerned 13.3 million French people, or half of those with a job.

If the figure fell in August, it still peaked at 1.3 million people. 

Realistic forecasts?

If Unédic's forecasts are rather optimistic, believes Bertrand Martinot, the future remains uncertain because of the health crisis.

"A few weeks ago, perhaps when Unédic made its forecasts, we did not have the impact of the curfew on a number of economic sectors," he recalls, adding that new, more coercive measures could still be in the pipeline. 

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Ditto for the number of recipients of unemployment insurance: there is a gap between the announcement of social plans, for example, and actual redundancies.

"People are often for months in reconversion mechanisms, which sometimes do not succeed. And they end up in unemployment", analyzes Bertrand Martinot.

"And then there are entire sectors of the economy where companies are in great difficulty and will still have difficulty getting back on track."

According to many forecasters, the peak of unemployment will be reached in 2021.