Faced with a budget deficit that continues to increase, the French Prime Minister is counting on full employment to improve the state's accounts. Gabriel Attal presented, Wednesday March 27 on TF1, his objective of seeing the number of unemployed reduce, mentioning in particular the reduction of the duration of compensation for unemployed people to 12 months. But while the rules for unemployment insurance have already been tightened twice since Emmanuel Macron was president, notably going from a duration of compensation of 24 to 18 months, the proposal from the head of government to reduce it further arouses the anger of trade union organizations.

The Prime Minister had brought together his ministers a few hours before this intervention for a seminar on the subject, and asked his Minister of Labor Catherine Vautrin "to prepare new negotiations" with the social partners.

LIVE | I answer questions from Gilles Bouleau and his team on TF1. https://t.co/1nwn0KeFQQ

— Gabriel Attal (@GabrielAttal) March 27, 2024

The CGT describes this measure as "unacceptable", while the CFDT considers that this regime cannot be a "budgetary adjustment variable".

“We will not solve the problem of unemployment by degrading the living conditions of the most precarious,” reacts on the social network X Olivier Guivarch, general secretary of the CFDT. “Out of 5 million job seekers, only 2.8 million are compensated, half of whom are working! The number of unfilled offers is 330,000. We must stop this stigmatization.”

We will not solve the unemployment problem by degrading the living conditions of the most precarious. Out of 5 million job seekers, only 2.8M are compensated, half of whom work! The number of unfilled offers is 330,000. This stigmatization must stop. https://t.co/kfnB84qgeW

— Olivier Guivarch (@OlivierGuivarch) March 28, 2024

“What does Gabriel Attal want?” asks François Hommeril, president of the CFE-CGC, about the same network. “He wants a 52-year-old unemployed senior technician to accept any job, from diving to guarding a parking lot.”

For Anne Eydoux, lecturer in economics at the National Conservatory of Arts and Crafts (Cnam), “it is not up to unemployment insurance to replenish the state coffers”. Also a researcher at the Interdisciplinary Laboratory of Economic Sociology (Lisa-CNRS) and at the Center for Employment and Labor Studies (CEET), the latter affirms that the reduction in the duration of compensation for the unemployed has not either to accelerate the return to employment.

France 24: Does the reduction in the duration of unemployment compensation really have an effect on the “bailout of state coffers”

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Anne Eydoux: 

First of all, it must be said that if the State had not granted serial reductions in contributions and if it had not eliminated the employee contribution to unemployment insurance, it would not have to contribute to unemployment insurance today (in place of employees and businesses).

It is not up to Unedic (an association led by the social partners and responsible by public service delegation for the management of unemployment insurance in France, in cooperation with France Travail, Editor's note) to replenish the coffers of the State. Unedic already finances the public employment service and has just been called upon to finance the France Travail reform. This latest reform requires a reorganization of the public employment and integration service which requires additional resources. The government which decided on it has not increased the budget allocated to it. In reality, this reform is financed entirely by cuts in unemployment insurance and in the solidarity system for unemployed people at the end of their rights. In other words, it is the unemployed who pay for the reform of the public employment and integration service.

The argument [for bailing out] state coffers is a biased argument. The government highlights its deficit, but that is not really the issue when it comes to unemployment insurance. If the state wants to reduce its deficit, it can increase its revenues – taxes. To reduce Unédic's deficit, its financing must be restored by restoring employee unemployment insurance contributions and increasing employer contributions. There is no reason to further cut unemployment benefits.

Why is unemployment insurance such a hobby horse for the government

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Reforming unemployment insurance is part of Emmanuel Macron's neoliberal program, and more broadly of the government. In 2017, candidate Macron was already planning its takeover by the State. To do this, he abolished employee unemployment insurance contributions, in the name of improving the purchasing power of employees. It seemed innocuous. However, these employee contributions are the very foundation of the system's contributory nature. This is what allows the unemployed to say to themselves: “I have contributed for this right to unemployment insurance”. And this is what justifies Unedic, the unemployment insurance scheme, being managed equally by the social partners who finance it.

Today, employee unemployment insurance contributions have been abolished, reducing the legitimacy of the unemployed to receive an allowance proportional to their previous salary, and that of unions to negotiate with employer representatives on the rules of unemployment insurance. unemployment.

With the Professional Future law of 2018, the State regained control of unemployment insurance. Today, the government is establishing the agenda and the road map for the negotiations. It sets unattainable objectives, which make it impossible for the social partners to reach an agreement, and then decides alone on the compensation rules.

The unemployment insurance agreements negotiated by the social partners every three years have been replaced by permanent reforms that increasingly reduce the rights of the unemployed. They first affected the most precarious in 2019. While unemployment seems to be on the rise again (the unemployment rate is 7.5% of the active population for the fourth quarter of 2023, Editor's note), these reforms attack today to the duration of compensation, which also affects unemployed people with a stable professional past. Older people are particularly exposed: the reduction in compensation rights and the end of the benefit for unemployed people at the end of their rights (ASS) add to the increase in the retirement age.

The government's argument is that reducing rights would speed up the return to work. This is an argument more ideological than scientific.

Also read: Emmanuel Macron, the results (3/4): the reduction in social spending thwarted by the crises

Gabriel Attal says he wants to copy the model of unemployment insurance in Germany, which has full employment while its unemployed receive compensation for a shorter period of time. So is this the right equation to achieve full employment

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In the early 2000s, Chancellor Schröder's Germany passed a series of neoliberal labor market reforms (the so-called "Hartz reforms") which both made deep cuts in unemployment insurance and encouraged unemployment. development of precarious jobs. They have favored the creation of bad jobs (mini jobs, 1 euro jobs for the unemployed) in services, which have also contributed to deteriorating the employment conditions of women.

But these reforms do not have much to do with the country's good employment performance after the 2008 crisis. These are mainly linked to the country's industrial model: firstly to the role of the social partners who negotiated a massive recourse to partial unemployment to protect industrial employment, then the resumption of demand from emerging countries for German production (luxury vehicles, machine tools).

Since then, Germany has reversed these Hartz reforms. Politically, they had permanently distanced the social democrats from their electorate. Economically, they weighed on purchasing power and growth. It was ultimately a conservative - Angela Merkel - who carried out more social reforms. Germany has implemented a minimum wage, which is today higher than the French minimum wage, and has re-regulated fixed-term employment contracts and temporary work. We could take inspiration from it.

While Germany has backpedaled on neoliberal reforms, France continues to move headlong on these reforms which have proven to be harmful. But it is not by attacking the unemployed that we will reduce unemployment.

Has the reduction in the duration of compensation been proven elsewhere

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There are evaluations of the effects of reducing the duration and amounts of compensation in several countries, including France, which introduced a degressive unemployment benefit in 1992 (called Allocation unique degressive). The argument was already that this would accelerate the return to employment of the unemployed. But the evaluations did not show any effect on returning to work. Paradoxically, they even noted an increase in the duration of unemployment for executives. However, it is for them that the degression of allocations was recently put back in place.

In other countries, some evaluations have suggested a weak effect of the reduction in benefit durations on return to employment. Some evaluations have suggested that the improvement in employment rates is paid for by a reduction in the quality of jobs found by the unemployed. Nowhere has the reduction in benefit periods led to a massive drop in unemployment or a return to full employment.

The speed with which the unemployed find a job depends much more on the economic situation, on the presence of jobs to be filled, in quantity and quality. For example, in France, until the 1970s, unemployment insurance was generous (with high wage replacement rates and durations of compensation), yet the unemployed quickly found employment. The country was at full employment. Nobody then considered it necessary to reduce the duration of unemployment to speed up the return to work. Unemployment insurance protects the unemployed, it is not the cause of unemployment.

Today we are therefore faced with a misunderstanding of the causes of unemployment. The government persists in applying neoliberal recipes which have not proven effective, except to impoverish the unemployed.

The function of unemployment insurance is to support the purchasing power of the unemployed and guarantee their right to an adequate income. It also has a countercyclical macroeconomic role, which consists of ensuring that the unemployed are relatively maintained in their income to support demand and growth.

Preserving a generous unemployment insurance system is essential to support the income of those who are deprived of work, especially in times of inflation. This is crucial to cushioning future economic crises.

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