How France is changing its unemployment benefits system

The French government began implementing reforms to unemployment benefits in July, but certain measures were delayed until October because of the pandemic. Here's what has already changed, and what will change in the future.

How France is changing its unemployment benefits system
Seasonal workers such as ski instructors could be impacted by the new rules. Photo: Olivier CHASSIGNOLE / AFP.

“In France, you must earn a better living by working than by staying at home, which is currently not always the case,” President Emmanuel Macron said in a televised address on July 12th, during which he laid out his post-Covid economic recovery plan.

During his speech, he announced that changes to unemployment benefits would be “fully implemented” from October 1st. Elements of the reform had already come into effect on July 1st, but France’s Council of State had suspended additional changes to the way benefits are calculated.

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What has already changed

Two main elements of the reform were implemented in July.

The first is a bonus system for businesses in industries which use an excessive number of short-term contracts. Businesses will be monitored over the course of 12 months; at the end of that period, those which resorted to short-term contracts more than the industry average will see unemployment insurance contributions rise by up to 1 percent of their payroll, while those offering more long-term contracts will have to contribute less.

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This will apply to 21,000 businesses of 11 or more employees. However, companies such as hotels, cafés and restaurants, which have been hard hit by the health crisis, will not be included until next year.

The second measure affects those under the age of 57 who were earning more than €4,500 gross per month before they became unemployed. 

Unemployment benefits in France are paid as a percentage of your previous salary, not a flat rate, so people who were previously high earners get more.

Now those in the under 57 and €4,500 per month category will see their benefits fall by up to 30 percent after eight months of claiming unemployment allowance.

An employment office in Marseille, southern France. Photo: NICOLAS TUCAT / AFP.

What changes in October

The measure which the Council of State objected to in the short term, and which could be introduced on October 1st, concerns the way in which job-seekers’ allowances are calculated.

The payments will still be calculated as a percentage of previous earnings, but the formula used for that calculation will change.

Under the new system, it is the average monthly salary – meaning the monthly salary divided by the total number of days in the month – that will be used. Previously, calculations took only the number of days worked into consideration. The change is likely to result in lower benefits for people who have not been in constant employment.

The idea is to “fight against excessive recourse to short-term contracts,” labour minister Élisabeth Borne said in July. She said such contracts “have exploded by 250 percent in 15 years”.

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But the Council of State, France’s highest administrative authority, ruled earlier this year that: “Uncertainties around the economic situation do not allow for implementing, at this moment, these new rules which are meant to support job stability by making benefits less attractive for workers alternating between short contracts and inactivity.”

In April, Unédic, an association with a key role in managing unemployment benefits, estimated that 1.15 million claimants would receive a reduced daily allowance, and that their income would fall by 17 percent on average. On the other hand, they said the average claimant would be entitled to 14 months of benefits instead of 11.

An artist sings above a banner reading “Withdrawal of the unemployment insurance reform” during a gathering of culture sector workers outside the National Choreographic Centre of Montpellier in April. Photo: Pascal GUYOT / AFP.

The change is particularly likely to impact seasonal workers, such as ski resort employees, seasonal agricultural workers and tourism staff. The amount of benefits they receive will now take into account their average income, including the periods when they were not working.

However, to limit the negative impact, the rules stipulate that claimants’ entitlements should not fall by more than 43 percent compared to the previous system.

France’s largest workers’ unions came together earlier this year to bring the case before the Council of State. The CFDT at the time called the plans “a disgrace in the middle of an employment crisis” and the proposals sparked strikes in ski resorts in February 2020.

Future changes

The government is also hoping to modify who is eligible for unemployment benefits.

Under current rules, you need to have worked during four of the previous 24 months. This is set to be increased to a minimum of six months, meaning recent graduates who have only had access to temporary contracts could lose out – as well as recent arrivals in France – but that will not happen until the jobs market shows signs of long-term recovery.

Once those conditions are met, the fall in job-seekers’ allowance for those previously earning over €4,500 per month, as detailed above, will also take effect after six months of unemployment instead of eight.

It remains to be seen whether the economic situation will meet the criteria – including a long-term fall in unemployment rates – necessary for these measures to be introduced in October.

Once all of the measures have been fully implemented, Unédic estimates they will save the state €2.3 billion per year.

Unions and bosses will be invited to the Prime Minister’s Matignon residence on September 1st and 2nd for “a full examination” of upcoming social questions, including unemployment benefits.

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What second-home owners need to know about 2023 French property taxes

Autumn in France is property tax season - and for second-home owners there are some important changes to know about this year.

What second-home owners need to know about 2023 French property taxes

Every year in September and October, households in France receive their property tax bills – which have historically included three things; taxe foncière, taxe d’habitation and the redevance audiovisuelle (TV licence).

For main properties, two of these taxes have all-but disappeared, but for second home-owners the situation is a little different.

Taxe d’habitation

This is the tax paid by the householder and it is being gradually phased out in France and most households no longer need to pay it – the exception to this, however, is maisons sécondaire (second homes).

Local councils set the rate for this tax, and in some areas this can include an additional surcharge on taxe d’habitation on second homes.

This usually applies in areas that have a housing shortage, and although the surcharge has existed for several years it has recently been expanded to include new areas.

Taxe foncière

This is the tax paid by the property owner and this remains in place, and in some areas has increased. Some local authorities, faced with the shortfall in overall taxe d’hab funds, have increased surcharges on the tax for second homes, while most local authorities are also increasing taxe foncière charges to offset the drop in revenues.

This tax is calculated based partly on the size and value of the property you own (which is why if you do any major renovations or add a swimming pool you need to tell the tax office) and partly on the tax level decided by your local authority. 

This means that the actual rate varies quite widely between different parts of France, but in some areas it has gone up by 20 percent.

Redevance audiovisuelle

This is the TV licence and this has been scrapped this year – including for second homes – so your bill will no longer have the €138 per household TV charge. 

Waste collection taxes

Some communes, especially in rural areas, also charge a taxe d’enlèvement des ordures ménagères (TEOM) or la redevance d’enlèvement des ordures ménagères (REOM) to cover rubbish collection. These are also payable in the autumn, although dates and amounts vary from commune to commune.

Renovation projects

If your property is what real estate agents refer to as an ‘opportunity for renovation’ you may be exempt from taxe d’habitation if your property is uninhabitable.

This is this is strictly defined in France as meaning a property is unfurnished, is not connected to utility services, and/or needs work costing at least 25 percent of the value of the property to make it habitable.

Other information

The amount of both taxe foncière and taxe d’habitation varies across France, but you should be informed in the sale details of the amount of the taxe foncière, and you can also request to know the amount of the taxe d’habitation when you buy a property. 

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Second homeowners are not eligible for most reductions or exemptions available on taxe foncière, with the exception of over 75s who are on low incomes. Be aware this is not automatic for second homeowners and must be specifically requested by those who are eligible.

Be aware, too, that authorities can charge an additional 10 percent for late payment without good reason – though you may get this removed if you write a polite formal letter asking for a remise gracieuse de la majoration. You can search for model letters on the internet.