ARPE early retirement for jobs scheme is renewed and expanded

Download article in original language : FR9901150FFR.DOC

On 22 December 1998, France's MEDEF employers' confederation and the five trade union confederations represented in the UNEDIC unemployment insurance fund signed an agreement to renew and expand the "job substitution allowance" scheme (ARPE), which enables employees to retire early on the condition that new workers be taken on to replace them.

Intersectoral negotiations led to the creation of the "job substitution allowance" scheme (Allocation de remplacement pour l'emploi, ARPE) in October 1995. The social partners agreed to create a scheme to enable those workers with a total of 40 years of retirement pension contributions behind them to take early retirement, on the condition that their employer take on a new worker to replace them (FR9811143N). According to the latest figures from the UNEDIC unemployment insurance fund, which runs the scheme, in the three years since the scheme was introduced, 127,287 workers have opted for ARPE. This has enabled 115,139 new workers to be taken on, 99% of them on open-ended contracts. This agreement was due to expire at the end of 1998. However, on 22 December 1998, the agreement was renewed for a further year and endorsed by the MEDEF employers' confederation (as CNPF has recently been relabelled - FR9811140F) and all the trade union confederations deemed nationally representative - CFE-CGC, CFDT, CFTC, CGT and CGT-FO.

The 22 December agreement

The new agreement provides for the renewal and expansion of ARPE:

  • The scheme is renewed until the end of 1999. Existing conditions will continue to apply, ie those workers over 58 years old (born in and before 1941) who have retirement pension contributions totalling 160 quarters (40 years) and who meet certain prerequisites (such as 12 years of membership of UNEDIC and one year's service with their current employer) will be eligible. Those who participate in the scheme will, as is presently the case, receive 65% of their previous gross pay. New workers must be taken on to replace those who retire. A new age requirement was introduced on 1 January 1999 for those workers who have made pension contributions for 172 quarters. They will now only be allowed to retire, at the earliest, on the first day of the month following their 55th birthday.
  • In 1999, ARPE will be extended to include the following employees who began their working lives at 14 or 15:
    • those who began work before 15 and who have contributed to the compulsory retirement pension schemes within the general contribution system for 168, and not 160, quarters will be able to retire, at the earliest, on the first day of the month following their 56th birthday. All periods of actual contribution as well as equivalent periods will be included in the calculations;
    • those who began work before the age of 16 and who have retirement pension contributions totalling 168 quarters will be able to retire, at the earliest, on the first day of the month following their 57th birthday. UNEDIC puts the cost of extending the allowance to include these categories of workers at FRF 1.2 billion for 1999 alone, and at FRF 4.6 billion for the duration of the period during which benefits will be payable. The benefits for these new categories of ARPE recipients remains fixed, as for other categories, at 65% of their basic pay.
  • All companies implementing ARPE will be responsible for bearing the costs. Their contributions are set at 20% of the worker's gross salary over the 12 calendar months before the end of his or her contract. These contributions must be made to the Joint Employment Action Fund (Fonds paritaire d'intervention pour l'emploi) managed by UNEDIC, at the latest, at the end of the third calendar month following the start of benefit payments.
  • In the light of new overall spending of FRF 12.5 billion, the social decided to allocate FRF 10.3 billion to the Joint Employment Action Fund in 1999.

MEDEF, as expected, reiterated its outright refusal of any government assistance for the scheme, in the name of "the autonomy of the social partners".

Reactions

The secretary general of the CGT-FO union confederation, Marc Blondel, welcomed the agreement renewing ARPE for a further year and extending it to include those employees who began their working lives at 14 and 15 years old. However, he was disappointed that this agreement had not been renewed for two years. CGT-FO now intends to get down to developing and improving this agreement at sectoral level and even in the public and semi-public sectors.

In the opinion of the CFDT confederation, "the ARPE negotiations not only enabled the renewal of the existing scheme but also, as we had demanded, its extension to include those who had begun their working lives at an early age and often in hard trades. This is thus a measure of social justice and a solid mark of solidarity between the generations. This agreement creates dynamic and tangible possibilities for the future, due to the fact that its implementation requires action to be taken within companies."

CFE-CGC also welcomed the agreement but called it "minimal." The union believes that future problems in the unemployment insurance scheme are likely. This, it says, will require renegotiation of the agreement, sooner rather than later, because people are no longer willing to accept the continual deterioration in the level of unemployment insurance coverage.

CGT decided to sign the December agreement after consulting its internal structures. Like the other unions, CGT believes this agreement to be a step forward but it considers that "too little negotiation was given over to the funding of the extended scheme."

The Minister for Employment, Martine Aubry, was very satisfied with the new agreement on the renewal and extension of ARPE, considering it to be a "just decision promoting job creation". She also noted "with satisfaction that the social partners will be willing to discuss - as early as the first quarter of 1999 - the unemployment insurance agreement" which expires at the end of 1999. "It is imperative that we find solutions for those affected by the development of precarious employment, especially young people, the majority of whom are not eligible for unemployment benefit", because they have not paid sufficient contributions, the Minister explained.

Commentary

The ARPE scheme falls into what has come to be known as the "activation of passive spending" - ie the use of funds collected to pay benefits to unemployed people in order to encourage employers to take on new workers. The whole question of creating jobs in this way has long been a contentious issue due to the fact that ARPE is based more on the principle of substitution - one worker takes early retirement and is then replaced by an unemployed person - than on the principle of creating new job opportunities. Nevertheless, if all unions are supporting this solution, it is probably because they are thinking of those elderly employees who began their working lives at an early age. (Alexandre Bilous, Ires)

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