“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.
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.
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”.
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.
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.
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.