Social security accounts balanced

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In May 2000, it was confirmed that, for the first time in 15 years, France's Social Security General Fund is not registering a deficit. Responses from trade unions and employers raise the question of whether this new-found equilibrium might provide the impetus for a comprehensive overhaul of the system.

In May 2000, the spring meeting of the Social Security Accounts Commission (Commission des comptes de la sécurité sociale) confirmed that the accounts of the Social Security General Fund (Régime général de sécurité sociale) had been balanced. The General Fund for employees is the largest social security fund in France. Overall, it provides close to half of all benefits, being responsible for over two-thirds of health and family-related benefits and a third of retirement pensions. Not since 1985 have the Fund's finances been balanced. In 1995, which was the worst year, the Fund's deficit reached FRF 67.3 billion. For 1999, the General Fund will post a small surplus of FRF 235 million (compared with total spending topping FRF 1,300 billion). The Accounts Commission anticipates a surplus of FRF 5 billion for 2000.

The balancing of the Fund's accounts takes into consideration both the surpluses recorded in the pensions (FRF 3.7 billion), family-related (FRF 4.8 billion) and work-related injury (FRF 1.1 billion) insurance operations of the Fund as well as the continued deficit posted by the health insurance division (FRF 9.3 billion).

These improved figures are based on increased revenue for the Fund. The creation of new jobs has boosted revenues from social security contributions. This increase in revenue has been further buttressed by the more comprehensive base of the recently introduced universal social security contribution (Contribution Sociale Généralisée, CSG) which, in addition to wages, also covers benefits and income from assets, and now replaces some other contributions (FR9712184F). The Commission puts the economic growth-related increase in the General Fund's revenue at FRF 18 billion for 1999.

The Minister of Employment and Solidarity also puts the turnaround down to spending control. However, increases in health spending, which continue to outstrip the budget provided for in the social security funding legislation, make this explanation a moot point.

The CGT trade union confederation sees the "return to a balanced budget as a result of renewed job-creating economic growth". This surplus should be reinvested in addressing social needs, "the most pressing of which is to increase minimum benefit levels". CGT has renewed its demand for an overhaul of the employer contribution base and has reiterated its opposition to a policy of providing employer contribution exemptions for various reasons, which will cost the General Fund a further FRF 19 billion in 2000.

In the view of the CGT-FO union confederation, "the positive results stem, above all, from the improved economic situation." CGT-FO points in particular to contribution exemptions, and does not believe that "the accounts, as they currently stand, reflect the reality of the situation." The breakdown in negotiations between the social security administration and some family doctors in the health sector has meant a "lack of tangible results on spending restraint".

CFDT believes that the balanced budget is "great news", and is a consequence of both renewed economic growth and the implementation of the CFDT's long-standing demand: the CSG. The CFDT chair of the National Health Insurance Fund (Caisse Nationale d'Assurance Maladie, CNAM), stated that "balanced accounts are necessary, but are not sufficient in themselves […] The improved situation must be used to more clearly define the specific healthcare covered by the Fund and to improve care quality."

The CFTC confederation maintains that, the "good news" should not paper over the problems. The union, which chairs the National Family Allowance Fund (Caisse Nationale d'Allocation Familiales, CNAF) is pushing for the surplus generated by the family allowance arm of the General Fund to "continue to be used to fund family policy".

Finally, CFE-CGC asserts that "the time is ripe for an overall shake-up of family-related benefits."

The return to a surplus situation comes at a time when the MEDEF employers' confederation is making the successful outcome of the current negotiations with the unions over an "overhaul" of French industrial relations a condition for its continued participation on the joint boards of the various divisions of the General Fund (FR0002143F). In the light of this fact, MEDEF is "surprised that the government views the FRF 45 billion in additional contribution income in 1999 as good news […] A situation of unfettered spending continues and requires urgent structural reforms."