In August 2002, the French parliament passed legislation setting up a new employment creation scheme for young people with a low level of education. At the same time, the new conservative government announced the scrapping of the youth employment scheme implemented by the previous government. Trade unions have severely criticised the scale of the social security exemptions for employers under the new scheme, and the lack of training provision for the young people concerned.
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In August 2002, the French parliament passed legislation setting up a new employment creation scheme for young people with a low level of education. At the same time, the new conservative government announced the scrapping of the youth employment scheme implemented by the previous government. Trade unions have severely criticised the scale of the social security exemptions for employers under the new scheme, and the lack of training provision for the young people concerned.
In the light of the fact that the number of people aged under 25 now seeking work has topped 400,000 (seasonally adjusted figures) – or just over one out of every five young people of working age – the new conservative government has set up a new employment programme aimed at people aged 16-22 without a baccalauréat (secondary education diploma) (FR0208101N). The bill on the subject drawn up by François Fillon, the Minister of Social Affairs and Labour, was definitively adopted by parliament on 1 August 2002. The scheme is the first flagship social initiative introduced by the new government.
All companies, no matter what their size, will be able to participate in this new 'youth employment contract' (contrat-jeunes) scheme, which will offer young people an open-ended employment contract for at least 17.5 hours a week at an hourly wage at least equivalent to the SMIC national minimum wage. The scheme provides for a totally new type of social security contribution exemption for employers. Companies will pay contributions for each young person employed as required by law. The social security funds will then pay back these contributions on a quarterly basis in the form of a lump sum of EUR 225 per month for every young employee paid the SMIC. In an attempt to avoid encouraging companies to create only low-wage jobs, this contribution rebate increases incrementally to a maximum of EUR 292.5 for young people employed on wages equivalent to 1.3 times the SMIC.
Reductions in employers' contributions on low wages already exist, but this new scheme will introduce an almost 100% exemption for employers from social security, supplementary pension and unemployment insurance contributions over two consecutive years. In the third year of the young person's contract, relief will fall to 50%. Employers choosing to terminate a contract, without a legitimate reason, within this three-year period will be required to reimburse the total financial assistance they have received. The government has reduced its targets from an initial 300,000 youth employment contracts by 2005 to 250,000. Of these, 40,000 are to be created in 2002. The total cost of the new scheme for the government will eventually amount to EUR 650 million.
The majority of employers’ associations welcomed the government initiative. However, both trade unions and left-wing political parties, which voted against the legislation, are unanimous in their criticism of it. They contend that the initiative provides for across-the-board cuts in employers' social security contributions without any commitment by companies to provide training, whereas the young people targeted by the scheme need to acquire qualifications. The Minister has put the ball in the social partners’ court, since training initiatives under the scheme have been left to sector-level collective bargaining. Employers’ associations and trade unions may choose to implement 'mentoring' schemes or to negotiate the accreditation of on-the-job experience gained by the end of the three-year contract period. This is a right that all employees have, although in practice it is rarely implemented.
As well as implementing the new programme, the government has scrapped the previous Socialist-led government’s 'youth employment' (emplois-jeunes) scheme (FR9709163F and FR0106162F), which, since 1997, has created 350,000 jobs in the non-market sector. The existing 220,000 contracts will be allowed to run their course but no new jobs will be created under this scheme. The Minister’s arguments for abolition are based on the scheme’s excessive cost (EUR 3 billion per year), its inadequate selection mechanisms ('four fifths of those young people covered did not really need it') and a perceived need to focus on the private sector.
Government support (declining over time) is to be provided to offset the impact for associations and non-governmental organisations of the sudden elimination of the public subsidies for employing young people under the old youth employment scheme. This initiative could potentially be extended to cover local communities where the defunct scheme has proven to benefit the entire population. Consultations will be undertaken with communities with a view to providing guidance for young people exiting the scheme and to promote their access to civil service recruitment competitions. In the public education system, the contracts of assistant teachers employed under the scheme that expire during the course of the school year are to be extended until June 2003. Nevertheless, the trade unions have expressed concern over the plight of young people and how schools are to be run after these contracts expire. More generally speaking, these issues are also a reality facing a significant number of local communities, associations and public bodies, for which the youth employment scheme was an almost indispensable source of funding.
Eurofound recommends citing this publication in the following way.
Eurofound (2002), New 'youth employment contract' scheme launched, article.
