In June 2000, the French government announced the contents of a forthcoming bill reforming employee savings schemes, which include various forms of profit-sharing. The bill, to be debated in parliament in October, has met with opposition from the trade unions.
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In June 2000, the French government announced the contents of a forthcoming bill reforming employee savings schemes, which include various forms of profit-sharing. The bill, to be debated in parliament in October, has met with opposition from the trade unions.
On 18 June 2000, Laurent Fabius, the Minister for the Economy, Finance and Industry, revealed the contents of a bill on employee savings programmes, which he intended to table in cabinet on 19 July. This bill is due to be debated in parliament in October.
Employee savings schemes (épargne salariale) have a long history in France and a stable framework has been in place since 1944. At the core of the employee savings mechanism is the "company savings plan" (Plan d'épargne entreprise, PEE), which acts as an umbrella for the various forms of company-level employee savings schemes. A statutory profit-sharing scheme (participation_)_ is mandatory in companies with a workforce of over 50. Other profit-sharing programmes (intéressement) are optional and are based on agreement between trade unions and management. The money paid to employees under either of these two schemes may be deposited in the PEE. In addition, employees may make additional non-compulsory deposits and employers may, if they wish, make additional top-up payments. These funds are managed in the form of a company mutual fund (Fonds commun de placements d'entreprise, FCPE). With the exception of two minor social security contributions, no taxes or social security premia are levied on the employment-related saving programmes.
Over the past few years, the various savings programmes have undergone expansion. Agreements on the introduction of the 35-hour week reached in companies between 1998 and 2000 (FR0001137F) have often included two- to three-year wage freezes, which employers have sometimes offset with additional remuneration in the form of contributions to employee savings schemes.
The issue of employee savings is sensitive, since it relates to the thorny question of the future of the pensions system (FR0004159F) and it is for this reason that the government led by Lionel Jospin is treading carefully on the reform of such schemes. First, the government commissioned two officials to compile a report. Subsequently, Laurent Fabius presented a draft bill to the trade unions in May 2000. At this stage, the CFDT, CFE-CGC and CFTC confederations appeared satisfied with the proposed mechanism, while CGT and CGT-FO rejected it. The bill released to the press in mid-June differs considerably from the one presented to the unions. While the second version of the new savings mechanism does not break with existing employee saving schemes, more emphasis is placed on company top-up pensions than in the original bill submitted to the unions. A 10-year savings plan is being considered, with provision for larger company top-up payments. Two years before their savings schemes mature, employees are required to decide whether they wish to opt for a lump sum, an annuity or some other form of payment. The new savings system, like the current mechanism, will be "subsidised," in that it retains the current levels of taxation and social security contributions exemption. The government also plans to use inter-company employee savings plans to allow employees of small companies – to date, rarely covered by such schemes – access to savings programmes.
This time, all the unions reacted negatively to the announcement of the bill. In light of the fact that the bill exempts clearly retirement-related savings from all contributions, in particular retirement pension contributions, the unions view the new system as a "cannibalisation" of the pay-as-you-go pensions system. The Ministry of Finance points out that for the new mechanism to be attractive, it must, at the very least, include the tax and social security incentives offered by the current system. The Ministry for Employment and Solidarity does not seem unsympathetic to the unions' arguments but the department will have a new minister when Martine Aubry steps down, as planned, in September or October. In addition, the unions are banking on the parliamentary debate to influence the course of the bill.
Eurofound recommends citing this publication in the following way.
Eurofound (2000), Controversial bill on employee savings programmes, article.
