Fall in uptake of early retirement schemes

Figure 2: Annual uptake of state-supported early retirement schemes by private sector employees

Note: * Data for 2009 are provisional.

Source: UNEDIC and Pôle emploi monthly statistics

The bulk of early retirements in 2009 (5,315 or 73%) was through CAATA, the scheme created specifically for workers exposed to asbestos. The next highest number (1,765) was for those retiring early through AS-FNE. CATS had only 179 new entrants.

Although the number of people who accessed the PRP scheme increased dramatically from 1994, this number declined from 1999 – the point at which all four schemes were available. Available figures show that, in the 10-year period from 1999, the number of people taking early retirement through the PRP scheme had reduced by a third (20,730 workers took early retirement through this scheme in 1999).

The numbers of workers taking early retirement in 1999 was 10 times as high as the same figure for 2003, indicating a fall in the use of state-funded early retirement schemes during this period. This is a result of a tightening of the eligibility criteria and a reduction in the money available from the state for the schemes. By 2009 the funds devoted to publicly funded schemes (with the exception of CAATA) were a tenth of what they had been in 2001, amounting to a total of €270 million in 2009.

Since 1995, when close to 100,000 workers took early retirement, use of these schemes has dropped steeply, reaching their lowest annual level in 2009 (7,260 entries). Thus, at the end of 2008, only 0.7% of working people between the ages of 55 and 64 were either totally or partially retired. In 2003 the figure for the same age group stood at 2.4%.

More older workers receive unemployment benefit

The social partners have long seen these state-funded schemes as an acceptable way of reducing the workforce, as older workers have traditionally been willing to leave the labour market to create space for younger entrants. Early retirement remains a deep-rooted tradition in France.

While the number of workers accessing early retirement schemes financed by the state has fallen significantly, there has been a corresponding increase in the number of people in receipt of unemployment benefit (Figure 3). This is because employers have tended to dismiss workers rather than grant them early retirement. The number of workers aged 55 and above in receipt of unemployment benefit more than doubled from 71,300 in 2000 to 144,000 in 2009. The numbers accessing early retirement schemes in Figure 3 includes those taking advantage of another discontinued schemec, Allocation de remplacement pour l’emploi (‘early retirement for jobs’ scheme) (ARPE), which ceased in 2002.

Figure 3: Uptake by people aged 55 and above

Source: Merlier (2010)

Company-funded early retirement schemes

Confronted by the reduction in the availability of publicly funded schemes, a number of companies have established and financed their own early retirement scheme without any support from the state. These schemes, which generally exist only in large companies, are put in place either through a company level agreement or unilaterally by the employer.

Nevertheless, the government opposes this practice as it runs counter to its objective of retaining older workers in the labour market. Following the law of 21 August 2003 (2003-775), which introduced retirement reforms, early retirement schemes put in place by an employer must be supplemented by a special contribution paid by the employer. This contribution has been applied to early retirement schemes since October 2007, and has since been increased from 24.15% to 50% of the total amount of the benefit.

When they establish such a scheme, employers are required to declare the total number of employees covered, their age and the amount of accrued benefits allocated to scheme members.

Early retirement plan at Renault

It seems, however, that the heavy cost of company schemes has not led to their extinction. Last November the car manufacturer Renault, which has 55,000 employees in France, announced the start of negotiations on an early retirement scheme that would cover 3,000 workers under the age of 58 who had worked in physically demanding occupations. This scheme provoked hostile reactions from politicians including the Minister for Labour, Xavier Bertrand, who announced his intention of investigating the scheme in order to try to invalidate the agreement.

Reference

Merlier, R. (2010), Les préretraites publiques en 2009 : dix fois moins d’entrées qu’en 1999 (925Kb PDF), DARES Analyses, September 2010, No. 062.

Frédéric Turlan, HERA