In December 2002, French employers' organisations and three of the five nationally representative trade union confederations - CFDT, CFE-CGC and CFTC - renewed their agreement on the jointly managed UNEDIC unemployment insurance scheme. With UNEDIC in financial crisis, the accord seeks to balance its budget over 2003-5 through cuts in benefit entitlement and increased contributions. The CGT and CGT-FO unions have criticised this agreement and its negative consequences for unemployed people.
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In December 2002, French employers' organisations and three of the five nationally representative trade union confederations - CFDT, CFE-CGC and CFTC - renewed their agreement on the jointly managed UNEDIC unemployment insurance scheme. With UNEDIC in financial crisis, the accord seeks to balance its budget over 2003-5 through cuts in benefit entitlement and increased contributions. The CGT and CGT-FO unions have criticised this agreement and its negative consequences for unemployed people.
On 20 December 2002, the agreement between the social partners on which the unemployment insurance system - the National Union for Employment in Trade and Industry (Union nationale pour l'emploi dans l'industrie et le commerce, UNEDIC) - is based was renewed, with the aim of balancing UNEDIC's budget over the 2003-5 period. The deal was signed by the main employers' organisations and three of the five trade union confederations with nationally representative status - the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), 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) and the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC). In order to be officially adopted, the agreement must now be endorsed by the government.
Unemployment benefits in France
In France, it is mainly UNEDIC, and only secondarily the state, which pays benefit to the unemployed people. This area of welfare is not part of the national social security scheme set up in 1945 to cover sickness benefit, old age pensions and child benefit. UNEDIC was established later, in 1958, by the unions and the employers, which manage the organisation together. This jointly run scheme is funded by contributions and pays out unemployment benefit proportional to previous earnings.
The compensatory cover under this unemployment insurance scheme is relatively poor, and only one out of every two unemployed people is covered by this system. There is thus a second-level welfare safety net funded by the state. This is a system called unemployment assistance (assistance chômage), paid for out of the government budget. The benefits provided are on a flat-rate basis and are means-tested. In most cases, this public scheme helps long-term unemployed people who have exhausted their eligibility under the unemployment insurance scheme. Any restrictions on eligibility introduced in the collectively-agreed scheme thus have a direct impact on the public one. An estimated 10% of unemployed people are recipients of benefit from the unemployment assistance scheme. Finally, the 'minimum integration income' (revenu minimum d’insertion, RMI) scheme created in 1988 by the authorities as an anti-poverty measure aimed at providing subsistence income, is also a de facto safety net for unemployed people, as most of the 1 million recipients of this benefit in 2001 were seeking employment.
Agreement reflects recession
By 2002, the UNEDIC deficit had reached EUR 3.7 billion (FR0207102N), and by 2005, if no measures were taken, it would have reached almost EUR 15 billion. The current deficit, one of the worst recorded for a decade, is obviously related to the deteriorating labour market and the increase in unemployment. In the space of 12 months, between September 2001 and September 2002, the number of job-seekers looking for permanent full-time employment rose by 7%, and there was a significant drop in the amount of 'durable' employment (ie on contracts for longer than six months) offered by employers.
However, this rapid decline in the UNEDIC accounts also stems from the unemployment insurance agreement adopted in 2000, which implemented new incentives for unemployed people actively to seek employment, while granting them better benefit entitlements (FR0101114F). Although the cutbacks made in the December 2002 agreement have left the measures on actively seeking work intact, they mean that the benefit improvements agreed in 2000 has now been scrapped.
The budget-balancing strategy adopted relies principally on toughening the criteria for eligibility and for the length of cover. These criteria have, since 1982, been based on the length of prior membership of the unemployment insurance scheme. As of 1 January 2003, there will be four types of cover for which the agreement sets out different eligibility criteria and benefit durations - see the table below.
| . | Length of employment required | . | |||
| . | 6 months’ employment over the last 22 months | 14 months’ employment over the last 24 months | 27 months’ employment over the last 36 months | 27 months’ employment over the last 36 months | |
| Eligibility criteria | - | - | Aged 50 years and over | Aged 57 years and over with 100 quarters of old age pension scheme membership | |
| Length of benefit payment | 7 months | 23 months | 36 months | 42 months | |
Source: UNEDIC.
In comparison with the previous situation, criteria for benefit eligibility have been made more stringent for all categories of employee, but those in precarious employment and those aged over 50 will be hardest hit by the new restrictions.
The level of unemployment benefits will also be lowered as the agreement provides for a rise in the amount of the contribution paid by recipients towards funding the top-up pension for unemployed people.
Lastly, both employees and employers will contribute to this budget-balancing exercise through an increase in contributions. From 1 July 2003, unemployment insurance contributions will rise from 5.8% to 6.4% of gross pay, of which 4% is to be paid for by employers and 2.4% by employees.
Agreement splits the unions
The agreement reached was not unanimously approved by the unions and, as was the case in 2000, the General Confederation of Labour (Confédération générale du travail, CGT) and the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) refused to sign it. The non-signatory unions feel that the effort required has not been shared equitably. It is in effect unemployed people who are going to fund 50% of the budget-balancing plan through the reduction in the length of benefit eligibility. Employees and employers will make a 25% contribution each to the funding of these measures through higher contributions.
CGT was therefore highly critical of an agreement that makes unemployed people, 'already the victims of a worsening labour market', bear the lion's share of the financial burden. A similar, but more qualified note was sounded by CGT-FO, which stated that because of this agreement, 250,000-300,000 unemployed people are likely to be excluded from the jointly-run unemployment insurance system.
Commentary
Nobody could argue against the need for the unemployment insurance scheme to adopt a rescue plan to balance UNEDIC's budget. Yet the compromise arrived at seems unbalanced, and unemployed people, whose benefit entitlement is going to be significantly reduced, are the main victims of this draconian cost-cutting strategy whose overall effects cannot yet be fully assessed. Additionally, this agreement is a radical challenge to the principles underlying the adoption of the 2000 unemployment insurance agreement. At that time, the introduction of a duty to reintegrate into the labour market for unemployed people, through the 'back-to-work assistance plan' (Plan d’Aide au Retour à l’Emploi, PARE), had a trade-off in the broadening of the benefit entitlement criteria. The agreement signed on 20 December 2002 has disturbed this balance between 'rights and obligations', as the PARE scheme has been retained but in a context in which the benefit entitlement conditions have been seriously weakened.
In terms of industrial relations, this agreement also raises an important issue because it comes at a time when, in agreement with the government, several unions are expressing a desire to improve the system under which unions are deemed representative (FR9909104F), with the aim that only agreements signed by those unions representing at least 50% of relevant employees would be valid. However, going by the results of the December 2002 elections to joint industrial tribunal s (conseils de prud'hommes) - which are a nationwide test of the representativeness of both trade unions and employers’ organisations in the private sector - the unions that signed the UNEDIC agreement won only 42% of the employees' votes. As the daily newspaper Le Monde stressed, not without reason, the new UNEDIC agreement 'will not help reinvigorate democracy in industrial relations'. (Carole Tuchszirer, IRES)
Eurofound preporučuje da se ova publikacija citira na sljedeći način.
Eurofound (2003), Unemployment insurance agreement renewed, article.
