Rich French set for hefty family allowance cuts

France’s richest families are set to have their family allowances cut by as much as three quarters, as part of the latest austerity measure aimed at reducing the country’s whopping public deficit.

Rich French set for hefty family allowance cuts
File photo: Philippe Huguen/AFP

The cuts, which are laid out in a report set to be handed to the prime minister this week, are needed to try to chop down the €2.6 billion debt held by the families section of France’s social security system.

The ‘Fragonard’ report produced by the Family High Council (Haute Conseil de la Famille) and named after its author Bertrand Fragonard, comes after President François Hollande rejected earlier claims that the government was to tax the allowances during last week's TV address to the nation.

The report, details of which were published in France’s Les Echos newspaper on Tuesday, suggests wealthier families would receive decreased allowances on a sliding scale based on their income.

"All families would retain the right to claim family allowances, but the amount would decrease according to their income," the report spells out.

According to Les Echos, the report suggests reducing grants by three quarters for the most well off.

The key question of a reform that will no doubt spark controversy over the coming months, will be at what income level the cuts will come into play. This, according to the authors of the report, all depends on how much the government wishes or needs to save each year.

If the government decides to save the more modest amount of €450 million a year, the income boundary would be set at €7,296 a month for a couple with two children, Europe 1 reported.

Those who earn any more than that would receive only a portion of the allowance, with couples earning €10,215 or more each month only receiving a quarter of the allowance – the minimum grant.

Some socialist deputies want to go further however. In an interview with Les Echos last month Gerard Bapt, the deputy for Haute Garonne said the income limit for couples with two children should be set at €4,416 a month.

Households earning more should only be eligible for half the allowance.

According to Bapt, this would save the government €1 billion a year, but the Haute Conseil fears this would have a severe impact on France's middle class.

A recent Ifop survey published in the weekly Journal de Dimanche revealed 66 percent of French people are in favour of reducing family allowances, depending on earnings.

In France the allowance is only paid out to families with two or more children.

A recent report by France TV contradicted the popular view that France is the most generous country in Europe when it comes to family allowances. Sweden, Ireland and Germany all hand out more than France.

In Spain, Italy and Great Britain, the allowances are limited depending on salary. In the UK, for example, families where one couple earns €50,000 or more each year no longer have the right to receive the full child benefit.

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French CEO gets €2.5m bonus despite job cuts

The French CEO who successfully oversaw his company merger with a Swiss firm has been granted a "scandalous" €2.5 million bonus just as his company announced a raft of job cuts.

French CEO gets €2.5m bonus despite job cuts
Lafarge chief executive Bruno Lafont who has been awarded a handsome bonus. Photo: AFP

Lafarge chief executive Bruno Lafont has been awarded a €2.5 million ($2.8 million) bonus for the successful merger with Swiss rival Holcim as the cement company announced job cuts.

The board of directors of the company awarded Lafont the money “for his key role in the merger project with Holcim” and “his exceptional performance,” according to a document posted on its website.

The Board accorded the bonus at a meeting on May 12, two days after Holcim shareholders approved the merger by a vote of 94 percent.

Lafont, who will receive the money in May, will become co-president of the merged LafargeHolcim.

The 40 billion euro merger will create the world's largest cement company with some 136,000 people, annual sales of €32 billion and underlying profits of €6.5 billion.

Union sources said Tuesday that Lafarge was planning to cut 380 jobs as part of the merger, while Holcim said Wednesday that it would eliminate 120 posts in central administration in Switzerland due to the tie-up.

The CFTC, the largest union at Lafarge, described the as bonus “scandalous” and called on Lafont to honour his statements made during the merger talks that no workers would lose out.