National action plan targets employment of older workers

At the beginning of June 2006, the French prime minister presented a national action plan to promote the employment of older workers. This plan completes a national intersectoral agreement established in October 2005 and aims to improve employment opportunities and conditions for older workers. The social partners have reacted positively to the content of the action plan.

Intersectoral agreement

A national intersectoral agreement on the employment of older workers was concluded on 13 October 2005 (FR0512104F). It was subsequently signed on 9 March 2006 by three employer organisations – the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the Craftwork Employers’ Organisation (Union professionnelle artisanale, UPA) – as well as by three trade unions, the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), the French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC) and the French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l’encadrement-Confédération générale des cadres, CFE-CGC). On the day the agreement was signed, the signatory parties agreed to include an extra clause stating that an end-of-contract payment should be given to senior workers under the new fixed-term employment contract.

A number of provisions included in this agreement referred to a national plan of action which was to be unveiled in the autumn of 2005. However, after being postponed to early 2006, this plan was once again rescheduled because of social unrest in the first quarter of this year (FR0605059I). Finally, on 6 June 2006, the Prime Minister, Dominique de Villepin, presented the national action plan to the Economic and Social Council (Conseil Économique et Social, CES). It is a joint national action plan drafted by a tripartite task force.

Content of action plan

The plan of action, which is to be enforced between 2006 and 2010, aims to reach an employment rate of 50% among people aged from 55 to 64 years by its final year of application. This plan has five main objectives, namely:

1. to change social perceptions through a nationwide communication campaign, starting in September 2006;

2. to keep older workers in employment. Although generally following the earlier intersectoral agreement regarding career maintenance and professional training, this plan also aims to:

   • gradually phase out the ‘Delalande contribution’ – a tax which must be paid by companies which dismiss employees aged 50 years and older; many exceptions to this levy already exist. This tax is to be phased out completely by 2010. It was set up in 1987 to compensate for the removal of the administrative authorisation of redundancy but in practice obstructed the recruitment of people aged 50 years and older and transferred possible redundancies to employees who were soon to reach 50 years of age

   • eliminate the possibility of undertaking sector-specific negotiations which aim to bring the retirement age down to under 65 years of age (FR0507105F). Existing agreements are scheduled to end in December 2009

   • redirect the fund for improving working conditions (Fonds pour l’amélioration des conditions de travail, FACT) towards age management, for which purpose it will receive an increased budget; arrangements for guidance and counselling are to be extended to companies with fewer than 500 employees (instead of fewer than 250 staff, at present);

3. to increase opportunities for older job seekers to return to employment: besides creating a fixed-term employment contract for older job seekers, the plan states that public employment services are to propose targeted schemes and that a certain number of subsidised employment contracts are to be reserved for persons aged 50 years or older;

4. to move away from the idea of a sudden, mandatory termination of all economic activity by managing the last stages of a career on a more gradual basis:

   • as requested by the intersectoral agreement in October 2005, the decrees of application of the retirement reform in relation to ‘gradual retirement’ were finally published on 7 June 2006. This facility is to be opened until 2008 for workers who have contributed to the Old Age Fund for 150 quarterly periods (rather than 160 quarters in the previous agreement) and who are therefore not yet entitled to a full pension. Furthermore, the possibilities for combining work and retirement are to be broadened in 2007

   • the special premium (surcote) for retiring later than the age of full pension entitlement is to be raised according to the amount of extra time in employment;

5. to involve tripartite actors in the follow-up of this plan. A permanent group is to be set up, consisting of five state representatives, five trade union representatives and five representatives of employer organisations. It will define and follow several effectiveness indicators, as well as indicators of the mobilisation of means and a management chart of the actions that were set up. The group will draft a summary of its work on an annual basis for review by the parties to the action plan, for the Employment Committee and the parliament. This summary will be presented to the Council of Ministers.

Views on new action plan

Employer organisations

The employer organisations have responded favourably to this action plan. The President of MEDEF, Laurence Parisot, has expressed her support for ‘the whole series of measures and the guiding lines’ behind the plan by emphasising that ‘an older worker who still contributes actively to our society is in no way hindering a young person from finding a job. It is, in fact, quite the opposite’. The CGPME has welcomed the phased removal of the Delalande contribution and states that ‘these measures are in line with the fact that it is necessary to support older workers and make sure they keep their jobs’.

The ethical organisation for socially responsible independent enterprises and growth (Entreprises de Taille Humaine, Indépendantes et de Croissance, ETHIC) has also welcomed the abolition of the Delalande contribution and considers that ‘the combination of employment and retirement is an absolute necessity for employees as well as for employers’ as it ‘lays down the groundwork for a gentle, long-term transmission of experience’.

Trade unions

The new plan of action has also received positive reactions from trade union confederations. The CFDT notes that the necessary ‘green light has been given by the relevant social partners and relayed by the government’ and believes that ‘the essential factor now is to track evaluation and application’. The CFTC ‘adheres to the principle of a specific employment plan for senior workers’ and is ‘favourable overall towards measures which aim to support older workers in the workplace while preventing dismissal and which therefore contribute to personal achievement’.

As far as the non-signatory unions of the October agreement are concerned, the General Confederation of Labour (Confédération générale du travail, CGT) has taken note of ‘everything concerning the right to professional training and the synergised cooperation of the different contributors to this training’ as well as ‘actions for the improvement of working conditions’. The General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) considers that ‘the work of the government has been constructive’.

However, the trade unions have expressed some reservations about the action plan. First, regarding measures in favour of employment for people aged over 60 years, priority must be given to employment for workers who have not yet reached the age of full pension entitlement. The removal of the Delalande contribution has been queried by the CGT and the CFTC. Meanwhile, the fixed-term employment contract for senior workers has been criticised by the CGT and the FO; the CFTC wants this contract to be applied as a temporary measure until employment conditions for senior workers improve.

Government

Although mentioned in two recent reports on senior employment and in a declaration by the Minister appointed to Work and Employment, Gérard Larcher, the proposed reform of the exemption from job-seeking for older people who are unemployed will not be included in this action plan. The Minister for Employment, Social Cohesion and Housing, Jean-Louis Borloo, has underlined that current practice on this matter will remain unchanged but that the means set aside for older job seekers ‘are to be amplified’.

Commentary

The employment rate of older workers amounted to less than 30% before 2000. Since then, according to Eurostat, the employment rate of the 55–64 year age group has increased from 30% in 2000 to 37.9% in 2005 – and to 40.9% according to the French National Institute for Statistics and Economic Studies (Institut national de la statistique et des études économiques, INSEE). The objective in the national intersectoral agreement of October 2005 and the national plan of action for the employment of older workers is an annual increase of two percentage points from 2006 to 2010 to reach the rate of 50% set by the European Council of Stockholm.

However, the coherence of the actions taken or potential actions remains difficult to assess. First, the various factors underlying the employment of older workers have been addressed separately. Negotiations have spread over several months and have been carried out without any overall objective. The negotiations on improving employment conditions for older workers, which were supposed to be completed by the end of August, have been at a standstill since the spring of 2006. Discussions on a complete review of the unemployment insurance system, which are planned by the draft agreement drawn up on 22 December 2005 relating to the UNEDIC (French national organisation managing unemployment benefit schemes) agreement, were scheduled to start at the end of September. Secondly, some proposals will have little impact or will not represent priorities, such as the new fixed-term employment contract, the premium for retiring later than the pension age and the wider possibilities for combining work and retirement.

Moreover, public authorities as well as employers and labour organisations are not sure about the best way to encourage older unemployed people to return to the labour market. The unemployment rate of people aged 50 years and older remains slightly below the corresponding rate for people aged from 25 to 49 years. Nevertheless, ageing wage-earners are represented more often among long-term unemployed people: in 2005, 63.2% of unemployed men aged 50 years and older and 60.9% of unemployed women aged 50 years and older had been jobless for at least one year. These figures compare with 44.9% and 47.1%, respectively, for unemployed men and women aged from 25 to 49 years.

Partly as a result of increasing numbers of people born during the ‘baby boom’ period (between 1946 and 1964) reaching the age of retirement, the overall unemployment rate is declining. However, despite the fact that there are now more older workers than before, it is still difficult to envisage a rapid improvement in their employment situation.

Annie Jolivet, Institute for Economic and Social Research (IRES)