Social partners discuss draft agreement on unemployment insurance reform

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In June 2000, France's social partners were discussing a draft agreement on the reform of unemployment insurance, in negotiations which form part of the talks on overhauling the industrial relations system launched by the MEDEF employers' confederation. The key element in the draft is an obligatory employment action plan, to which unemployed people would be obliged to sign up in order to receive benefits. Several points are yet to be clarified, and some trade unions are thus reluctant to sign the deal, which will have to be altered to accommodate them.

In late 1999, the MEDEF employers' confederation launched a project aimed at achieving a "new social constitution" (nouvelle constitution sociale), to include a "social-partner-led overhaul of the industrial relations system" (FR9912122F). As a result, the leaders of the five main trade union confederations and three main employers' associations met in February 2000 and agreed a joint list of eight main issues for negotiation in 2000 (FR0002143F). The first of these topics to be negotiated is unemployment insurance (FR0004154N) - alongside other sets of talks (FR0005162N) - which will constitute a litmus test for the future of France's jointly-managed social security and related bodies. In mid-June 2000, the parties were discussing a draft agreement which could be finalised soon. Several points are yet to be clarified, and some trade unions are thus reluctant to sign the deal, which will have to be altered to accommodate them.

20 years of cuts in entitlements

The UNEDIC unemployment insurance system was set up in 1958 under an agreement between MEDEF (then called CNPF) and four trade union confederations - CFTC (now CFDT), CGT-FO and CGC (now CFE-CGC). It is an employment-related system, which obtains the major part of its funding from employers' and employees' contributions levied on workers' pay. Starting in the early 1980s, three sets of reforms implemented by UNEDIC's managing bodies have tightened eligibility for unemployment benefits.

A 1982 government decree set up a new system whereby unemployed people are no longer paid benefits based on the circumstances surrounding the loss of their jobs, but mainly in terms of the length of time they have been contributing to the system. Consequently, those workers most vulnerable to unemployment have the least favourable UNEDIC coverage.

In negotiations in 1984, employers' demands were met and the system was divided into two separate bodies: the unemployment insurance fund managed by the social partners, which covers only those unemployed people with a long contribution history; and a support system managed by the government, which covers those not eligible for unemployment insurance, such as long-term unemployed people, young people, and those in precarious employment. In 1992, a third overhaul tightened eligibility requirements further and merged existing benefits into a single one which decreases on a sliding scale every four months. The reforms have had a major negative impact on unemployed people. Currently, only 40% of unemployed people are covered by UNEDIC, of whom 40% received benefits equivalent to half the national minimum wage in 1998.

Employer-oriented draft agreement

The agreement currently being discussed by the social partners provides a snapshot of the possible future set-up of the unemployment insurance system. A key element is the creation of an "employment action plan" (plan d'action pour l'emploi, PARE), which forms the centrepiece of a new benefit system. The provisions of this plan currently constitute the stumbling block to the successful conclusion of the negotiations.

If the employment action plan were implemented, job-seekers would be entitled to a vocational assessment and offers of employment or training. Job-seekers would be required to take part in the activities laid down jointly in the framework of the employment action plan. Benefits would be dependent on compliance with the joint commitments in the plan. In accordance, the current rules whereby benefits decrease over time could be reviewed in depth. If job-seekers complied with the terms of the plan, the progressive reduction of benefits could potentially be suspended. However, if the unemployed people failed to accept employment offered to them, heavy penalties would be imposed:

• a 20% cut in benefits for the first job refused;

• suspension of benefits for the second job refused; and

• termination of benefits for the third job rejected.

If the job-seeker had failed to find employment after the six-month employment action plan has ended and if the job-seeker's resolve to find work was not in doubt, the plan could be reviewed and extended for a further six months on the condition that the job-seekers accepted any offer of employment made to them.

The plan could be compulsory for all those eligible for unemployment benefits who register as unemployed from 1 January 2001.

Other elements in the draft agreement are:

• a slight relaxation of benefit eligibility criteria. To be eligible for benefits, unemployed people would have to have four month's employment over the previous 12 months instead of the current eight months. This measure should enable 30,000 unemployed people not currently eligible for benefits to be brought under the unemployment insurance umbrella;

• the creation of new forms of employment contract of between 18 months' and five years' duration, targeting those experiencing real difficulty finding a job. The new contracts could also be used for the duration of a given assignment. In this case, specific details would have to be established by collective agreement in those sectors willing to implement the scheme; and

• cuts in both employers' and employees' unemployment insurance contributions over three years.

Trade union reactions

The CFDT trade union confederation, which has not been opposed in principle to the reform. is keen to "scrap the clause [in the draft agreement] requiring unemployed people to accept any job". CFTC is broadly in agreement with CFDT on this issue and would like to see legitimate grounds for refusal of employment specified in the plan. This union believes that the definition of "type of work offered" must be elaborated on. CGT-FO is by no means ready to sign the agreement. It wants to make the employment action plan optional and also sees the penalties for refusing employment as unacceptable. This union wants more safeguards on the issue of benefits for unemployed people and rejects the idea that UNEDIC should "become a huge sorting office with the more privileged jobseekers being able to sign an employment action plan and others not". For the time being, CGT refuses to endorse a draft agreement that might lead to a social backlash. One of this union's major demands is that "all those without a job have a decent income and that in particular the principle of reducing benefits over time be dropped". As for the types of jobs that might be offered under the employment action plan, CGT believes that they should involve permanent standard-contract employment.

Commentary

It is an understatement to say that the unions have had some difficulty finding their bearings throughout the negotiation process over unemployment insurance. Of course, the unions found themselves in a relatively weak position. From the outset, MEDEF appeared to be the major architect of the reform, while the unions seemed relatively uncomfortable with drafting a coherent alternative unemployment insurance project. In addition, it is worth noting that over the past 20 or so years, UNEDIC's benefits have been cut back with the more or less tacit consent of the majority of the unions. The unions' difficulty in adopting a firm stance during the negotiations was patently obvious on the main issue of unemployment benefit.

At the initial meetings, most unions had stated their resolve to overhaul the system to improve benefit levels and coverage rates, especially for young people and those most vulnerable to unemployment. However, since the current negotiations began in March 2000, the issue of benefit levels has never been directly broached. The issue was only touched on in discussions on the employment action plan. Consequently, the terms and conditions for the implementation of the plan are the current focus of discussions. Clearly, there are many points concerning the implementation of the plan that need to be clarified. Will the plan be compulsory or optional? What sort of benefit structure will be provided for those unemployed people outside the employment action plan? Who will decide whether the job-seeker has complied with the terms of the employment action plan and according to what criteria? In mid-June, the social partners still had a few days to shed light on these most important issues. (Carole Tuchszirer, IRES)