France: Green light on implementing the arduous work account scheme
In December 2015, the government accepted the last two decrees establishing a points scheme for arduous work and in June 2016 the Ministry of Labour gave the green light on its implementation. Employers claim the scheme will lead to job cuts while some unions have criticised certain aspects.
Since the 2010 pension reforms, the Labour Code (article L. 4121-1) has obliged employers (under their general obligation of safety) to prevent arduous work. Law No. 2014-40 of 20 January 2014, concerning a new pension reform, established the ‘account for arduous work’ (compte pénibilité). This enables employees exposed to one arduous working condition to earn one ‘point’ every three months (four points per year) or two points every three months if they are exposed to several factors. Employees can use their points in three ways.
- Vocational training: each point in the arduous work account qualifies for 25 hours of training. The intention is that employees use their account to finance training so as to be able to move to a less arduous position in their company or in the wider labour market.
- Reduction of working time: 10 points in the account can be used to finance part-time work for three months, without loss of pay.
- Early retirement: 10 points allow employees to retire 3 months earlier than expected at their full pension rate. This scheme takes into account that workers exposed to arduous working conditions have a reduced life expectancy and thus will have a shorter pension period compared with the average life expectancy of other workers.
The system is financed by social contributions paid by employers. A certain percentage of these contributions will be calculated based on the wages of employees exposed to arduous conditions. The remaining percentage will be levied on all gross wages as of 2017.
The scheme is being implemented in steps from 1 January 2015 to allow companies time to identify which jobs involved arduous work. Only four ‘hardship’ factors are considered:
- repetitive work;
- night shifts;
- working an alternating succession of shifts;
- working in a hyperbaric environment (that is, at pressures higher than normal atmospheric pressure).
Six other factors (manual handling of loads, painful working positions, mechanical vibration, noise, extreme temperatures and hazardous chemicals) were expected to be added from 1 January 2016. However, in May 2015, the government decided to postpone this deadline to 1 July 2016.
In addition, Law No. 2015-994 of 17 August 2015 on social dialogue and employment sought to simplify the introduction of the arduous work account.
On 30 December 2015, the French government accepted the last two decrees (2015-1885 and 2015-1888) implementing the arduous work account. This was followed on 20 June 2016 by the publication by the Ministry of Labour of an instruction on the scheme's establishment (PDF).
Content of the new decrees
The latest two decrees confirmed the postponement of the need to take the further six factors of arduous work into account.
They also made changes to the definition of two of the factors: repetitive work and exposure to noise. With regard to the latter, the employee must have been exposed for at least 600 hours to a noise exposure level assigned to an 8-hour reference period of at least 81 dB(A). Where exposure to repetitive work is concerned, the employee must execute repeated movements involving all or part of their upper limbs for a period equal to or less than 30 seconds, during which they must implement 15 or more technical actions. A minimum exposure period of 900 hours qualifies this as arduous working conditions .
The decrees also set out the terms of the annual declaration of employers to the pension fund regarding the exposure of employees to arduous work.
Potential impact of the account
The impact assessment (PDF) published in 2013 to accompany the pensions bill estimates that, in 20 years’ time, 300,000 employees will be using points accumulated in their accounts each year. It is estimated that the introduction of this account will cost around €500 million in 2020, €2 billion in 2030 and €2.5 billion in 2040. However, according to a recent study by the French non-governmental macroeconomics research institute, Coe-Rexecode, the funding the account will cost more than €800 million in 2040 (PDF). According to this study, there are an estimated 3.3 million arduous jobs in France, of which 75% involve exposure to one hardship factor.
According to an evaluation by the government’s Directorate for the Coordination of Research, Studies and Statistics (DARES), in 2010 about 39% of French employees (about 9 million people) were exposed to at least one arduous factor (PDF) and 9.9% to at least three factors (about 2.3 million employees).
Coe-Rexecode estimates the expected revenue in 2017 to be around €270 million per year and argues that ‘by 2025 a significant increase in contribution rates for arduous positions will be needed to balance the fund’. The institute also warns that the increase in the resulting labour costs ‘would lead to about 100,000 job cuts from 2060’.
Social partners’ reaction
In a press release issued on 4 January 2016, France’s main business confederation Medef claimed that ‘this is one of the most complex and counter-economic measures since the implementation of the 35-hour working week’ , warning that it would undoubtedly accelerate job cuts in France.
The second largest employers’ organisation, the General Confederation of Small and Medium Enterprises (CGPME), was also strongly opposed to the arduous work account, criticising in a statement ‘its complexity, the extra costs and the legal uncertainty for companies’. In a press release issued on 26 May 2015, it added that this ‘French specificity (...) will have negative consequences on the competitiveness of companies’.
However, the trade unions have generally welcomed the decrees. In a press release dated 6 January 2016, the French Democratic Confederation of Labour (CFDT) said: ‘We have been fighting for more than 10 years to repair the injustice of differences in life expectancy’. In a declaration on 21 November 2015, the General Confederation of Labour (CGT) approved the mechanism’s principles, but it denounced ‘the concrete modalities of implementation that are highly questionable’ and claimed that the government had given into the employers’ demand for flexibility. According a press release by France’s third largest union, Force Ouvrière, ‘the arduous work account in its current version does not meet the expectations of employees exposed to harsh working conditions’.
Early in 2017 the arduous work account should be incorporated into a more ambitious reform, the proposed individual occupational account (compte personnel d’activité, CPA) to meet various social rights. Social partners agreed, on 8 February 2016, on a ‘closing statement’ which the government will use to implement the CPA. However, the three employers’ organisations have stood firm, warning in a joint statement that the reference to the arduous work account ‘cannot be taken as an acceptance of the measure, as in its current state it remains impossible for companies to implement’. Thus, it is possible that the arduous work account could still evolve.