Unemployment insurance: 5 questions about a highly contested reform

The subject is very sensitive. The executive gives, this Wednesday, in the Council of Ministers, the kickoff of a new reform of unemployment insurance. The government hopes to respond to recruitment difficulties by varying the conditions of compensation for the unemployed according to the economic situation. The idea is categorically rejected in by the trade unions.

The law project aims initially to extend current unemployment insurance rules. The latter, resulting from an already controversial reform of the first five-year term, expire on October 31. For the executive, it is a question of avoiding any legal vacuum and of allow time to negotiate the new reform. Explanations.

1. What was the objective of the first reform?

The unemployment insurance reform initiated during the first five-year term followed a campaign promise from Emmanuel Macron. It served three main purposes. First of all, the executive wanted to fight against the abusive use of short contracts, with the introduction of a bonus-malus on unemployment contributions for companies. The idea was to encourage them to hire for long-term jobs.

The executive also intended to make work pay more than inactivity. For this, new compensation rules had been put in place. Finally, the government wanted to strengthen support for job seekers, notably by recruiting new counsellors.

This reform, which was also intended to save money, was gradually implemented between November 2019 and December 2021. In the context of the health and economic crisis linked to the Covid-19 pandemic, its application was delayed several times. .

2. How is compensation currently calculated?

1^er October 2021, the calculation of the daily reference wage, which serves as the basis for unemployment benefit, has been modified. It now takes into account both the days worked and the days not worked during the 24 months preceding unemployment. Previously, the compensation was calculated by dividing the income by the days worked during the reference period.

With the new calculation system, job seekers alternating unemployment and activity, called “permittents”, are penalized. A floor guaranteeing a minimum allocation is nevertheless provided for.

To open rights, it is also necessary, since December 1, to have worked six months (i.e. 130 days worked or 910 hours) during the last 24 months (36 months for those over 53). Previously, you had to have worked for 4 months.

Finally, for unemployed people under 57 who have received a salary of more than 4,500 euros gross, a reduction of -30% in benefits applies from the 7th month. So many rules denounced for their harshness by the unions.

It should be noted that while all employees are insured against the risk of unemployment, not all job seekers are compensated. Some because they haven’t worked hard enough. According to data from Unédic, there were 6.5 million people registered with Pôle emploi in December 2021, but only 2.6 million (40%) of them were compensated. The body that manages the unemployment insurance scheme predicts that they will be 2.4 million at the end of 2022.

3. Why go further?

For the executive, it is urgent to go further in the face of the recruitment difficulties of companies. It is “unbearable to still be at an unemployment rate of 7.4% and to have at the same time a unanimous return from business leaders on the difficulties of recruitment”, advanced the Minister of Labor, Olivier Dussopt. .

The latter makes the new reform one of the conditions for achieving the objective of full employment, set by Emmanuel Macron, in 2027. To achieve this, the Head of State believes that “our compensation rules must take into account the job market situation.

4. What could change?

Faced with recruitment difficulties, the executive therefore wishes to modulate the conditions of unemployment insurance according to the situation of the labor market, like what is done in Canada. “When things are going well, we toughen the rules and, when things are going badly, we relax them”, summed up Olivier Dussopt.

Three parameters could potentially change: the amount of compensation, the eligibility criteria, and the duration of compensation. However, the Minister seems to exclude the first parameter. “The question of the level of compensation is not necessarily the right one,” he observed. The average net amount of compensation is 960 euros for all those receiving compensation (1,070 euros for recipients who do not work and 720 euros for those who work and thus supplement their income).

It is “rather the criteria for access to full-rate compensation and the duration of full-rate compensation that can be the keys to discussion,” he said. As a reminder, the maximum duration of compensation is twenty-four months before age 53, thirty months between 53 and 54, thirty-six months beyond.

5. What are the next steps?

The government will seize the social partners with a request for negotiation of a modulation of unemployment insurance. It is then up to the trade unions and employers’ organizations to open negotiations or not to agree on the criteria.

But a deal may never work. For the unions, recruitment difficulties are primarily linked to training and the attractiveness of professions (salaries, working conditions, mobility, etc.). Meeting Monday at the headquarters of the CFDT, they agreed on their opposition to negotiating such a “countercyclical” measure. They should publish a joint text to this effect next week.

The Medef is in favor of changing the compensation rules. Its president, Geoffroy Roux de Bézieux, has already judged that “opening negotiations will be useless since it will not succeed for lack of a diagnosis shared with the unions”.

From then on the mass seems to have been said. Without agreement, the government, which wants implementation “before the end of the year”, will define the rules by decree alone. It remains to vote on the text. The answer is expected in early October, since the bill will be the first to pass through Parliament.