Unemployment insurance is under construction again. This Wednesday May 22 and Thursday May 23, the Minister of Labor Catherine Vautrin receives the social partners to discuss the new reform, the terms of which should be revealed at the beginning of next week, with an announced tightening of compensation rules.
In an interview with The Express published on Wednesday, Emmanuel Macron praises a reform which “will strengthen the effectiveness of our compensation system and work incentives. We act at the right time in the cycle, because it is when growth is about to restart that we must prepare the conditions for toughening unemployment insurance.”
Received Wednesday evening, the CFDT denounces a reform intended to “make even more savings”, according to its number 1, Marylise Léon interviewed on BFM Business. For her part, Catherine Vautrin’s entourage assures that the minister wants “the government copy to evolve following these consultations”. But several avenues are already emerging.
Opening of rights
After insisting on reducing the duration of compensation, Prime Minister Gabriel Attal further highlighted the conditions for opening rights to unemployment insurance. Until now, one must have worked at least six months in the last 24 months. A duration which thus constitutes the affiliation reference period. Tightening the affiliation condition would primarily affect beneficiaries under the age of 25 or those leaving a fixed-term or temporary contract.
Among the avenues mentioned by the executive is the fact that it will be necessary to have worked nine months over the last two years, and no longer six. According to calculations by Unédic (organization in charge of unemployment insurance, Editor’s note), if the minimum time is increased to seven months, this will affect 11% of beneficiaries and will save 400 million euros. If it is raised to 12 months, the economy will amount to 2.3 billion.
In addition, reducing the reference period from 24 to 18 months would allow much greater savings, of between 5.1 billion and 7.5 billion euros. And even if those over 55 were excluded from this measure, it would still bring in 3.9 to 6.3 billion.
Duration of compensation
However, a reduction in the duration of compensation remains envisaged. The maximum duration of compensation is currently 18 months for those under 53. Employees aged 53 and 54 can be compensated for up to 22.5 months, and those aged 55 and over for up to 27 months.
If it is reduced to 12 months for all ages, 45% of beneficiaries would be affected, saving 5.9 billion euros, according to Unédic. Furthermore, even if seniors continue to benefit from a longer period of compensation, the savings would still be 5 billion.
At a minimum, the age limits for seniors should be raised by two years due to the increase in the legal retirement age to 64, if seniors maintain a special plan.
Timeout
Currently, there is a seven-day waiting period after registering with France Travail (formerly Pôle emploi) to receive unemployment benefit. A period of time that only applies once per 12 month period. A deferred paid leave capped at 30 days also applies to employees leaving a company without having taken all their leave.
Finally, the deferral for supra-legal termination compensation concerns employees who have been made redundant or who have negotiated a conventional termination with compensation higher than that provided for by law. Currently, it is capped at five months. It concerns people who are older and better compensated than the average. If this ceiling is doubled, this would allow the State to save 390 million euros.
Modulation
Under the principle of “countercyclicality”, which has applied since February 2023, the duration of unemployment benefits is reduced by a quarter when the unemployment rate remains below 9%. This rate is currently 7.5%. The government could review these rules.
Unédic considered several hypotheses, including a reduction in compensation of 50% instead of 25% in the event of an unemployment rate below 9%. If this scenario is chosen, 63% of beneficiaries would be affected, which would allow the State to save some 6.3 billion euros.
In addition, the government could also introduce a new level of unemployment rate below which the duration of compensation would be further reduced. At 7% or 6% for example.
Extension of the bonus-malus
Emmanuel Macron’s campaign promise in 2017, the bonus-malus is a system hotly contested by employers which aims to fight against the abuse of short contracts. Implemented in the summer of 2021, it currently concerns companies with eleven employees and more than seven sectors that consume a lot of short contracts, such as accommodation, catering and even transport.
Concretely, the system consists of modulating the employer’s unemployment insurance contribution – 4.05% of the payroll – upwards (malus) or downwards (bonus), depending on “the separation rate” of the companies (ratio between the number of ends of employment contracts followed by registration of the former employee within three months at Pôle emploi and the average annual workforce of the company, Editor’s note), compared to the median rate in their sector.
The extension of the bonus-malus for short contracts to new sectors is therefore one of the avenues explored by the government, which is defending a tool that allows the reform not to be imposed solely on job seekers.