France: Occupational personal accounts planned for 2017

In the framework of its labour market reform, the government is proposing new legislation aimed at creating an individual occupational account for each employee, offering entitlement to a range of social benefits throughout their career. Details were discussed at a high-level conference of the social partners in October.

Background

'Labour mobility is one of the most important labour market changes in the last 30 years.' With these words pronounced in June 2015, the French Prime Minister Manuel Valls summarises the main rationale for a range of labour market reforms over the past three years (in French, 811 KB PDF). Research on worker mobility and employment stability (in French, 233 KB PDF) highlights that:

  • the proportion of mobile workers (that is, employees who frequently change their jobs and/or job locations) has increased since the beginning of the 1980s;
  • this development is likely to continue as workers in ‘stable’ employment go on retirement. 

However, there are a range of statutory rights which are based on the principle of stable employment since their use is linked to an employment contract with a particular employer. As a consequence, a change or loss of job is often associated with a loss of a range of privileges acquired over the duration of employment.

In the current system, for instance, complementary health insurance (the French mutuelle) is provided by the employer. When an employee changes companies or becomes unemployed, they also have to change their additional insurance or may even lose it. Similar problems occur in a variety of different areas. 

Therefore, the socialist president and government have introduced a range of labour market reforms aimed at attaching individual rights to a person rather than to an employment contract.  In May 2015, President François Hollande announced a major social reform (in French) that introduces individual occupational accounts in which employees accumulate a range of different employment rights independent of their current employer or employment status.

Transferable employment rights 

Probably the most important initiative is the introduction of individual training accounts for all employees in France. The government has passed legislation, based on the terms of an earlier collective agreement, which stipulates the setting up of individual accounts and eligibility for training. Since January 2015, employees can open their accounts online and, as of January 2016, acquire 24 hours of training per year (pro rata for part-time work) up to an upper threshold of 150 hours, and 12 hours per year thereafter.

In addition, the 2014 pension reform introduced individual accounts for employees performing arduous tasks. Since the beginning of 2015, employees have been entitled to collect points for working under arduous conditions as defined by the social partners (in French) in 2008, including:

  • manual transportation of heavy items;
  • working in arduous positions;
  • exposure to mechanical vibrations or chemical agents;
  • working under high physical pressure, in extreme temperatures or in a noisy environment;
  • night work;
  • regularly changing teams;
  • repetitive tasks.

If an employee is exposed to at least one of these factors, they can collect one point per year (two if exposed to several factors). Points may be used to reduce working time, to access re-training for less arduous occupations and even to take early retirement.

From 1 October 2014, it has been possible for people to accumulate periods of unemployment benefits. An employee whose benefits have not yet expired and who takes up a job may draw on the same benefits once the new employment relationship has come to an end. Previously, parts of the right to receive benefits would have been lost. The only condition is that the new job has been performed for at least a month (150 hours). The mechanism of ‘recharging’ unemployment benefits aims to give people an incentive to take up short-time job opportunities and to reduce uncertainty. This reform was based on the provisions of a collective agreement (in French, 237 KB PDF) concluded in March 2014.

Finally, François Hollande has announced the possibility of a reform that would allow employees to transfer their complementary health insurance when changing companies. Currently, complementary health insurance expires when the assured person leaves the company. In France, around 95% of employees are covered by additional health insurance schemes that top up the state-funded basic insurance. Following a major cross-sectoral national collective agreement concluded in January 2013, complementary health insurance is to be made compulsory for all companies by the beginning of 2016.

CPA: Personal occupational accounts

In May 2015, Prime Minister Manuel Valls announced the creation of a so-called individual occupational account (compte personnel d’activité, CPA) from 1 January 2017. The new measure continues the approach adopted by the socialist government that aims to disassociate individual employment rights from the employment contract. Each employee will have a CPA which they will keep throughout their career. In addition, the focus will shift from providing individual rights to an employee in a given job to the stated aim of safeguarding an entire career with transitions between jobs as well as between periods of employment and non-employment (unemployment, parental leave or long absence for health reasons, for instance).

The provisions on the CPA were part of a larger packet of legislation that sought to modernise social dialogue in France. There was heated debate on the issue after social partners failed to reach an agreement on employee representation in small companies and the simplification of employment representation bodies in general. The introduction of the CPA went almost unnoticed, although a spokeswoman for the governing Socialist Party has described the new measure as a 'potential revolution of public employment services'.

In a first step, CPAs will cover:

  • individual training accounts;
  • individual accounts for employees performing arduous tasks;
  • unemployment benefit accounts;
  • working time accounts.

In the long run, the package may be extended to provisions such as employee saving schemes or even pension schemes.

In the meantime, the government has commissioned its internal think tank and consultancy service, France Stratégie, to convene a committee of experts to draft a proposal (in French, 345 KB PDF) on the objectives, the design, the technical, social and financial challenges, and the implementation of the CPA.  The plan was to discuss the proposal with the social partners at the major social conference in October 2015 to launch the government's social reform strategy.

Reaction of social partners

The French Democratic Confederation of Labour (CFDT) claims it had made a similar proposal previously and that little is known of the details of the measure. CFDT stressed that it would refuse any reduction of statutory employment rights (in French) during discussions on the CPA. The General Confederation of Labour (CGT) criticises the fact that the unions had not been consulted on the CPA before the parliamentary vote.

In a statement (in French), France’s largest employers’ association, the Movement of French Enterprises (MEDEF) claimed that the CPA would not improve flexibility in the labour market and, if not adjusted, may just be 'a tool of no interest'.

Commentary

It is difficult to assess the anticipated impact of the new individual training accounts when there are no details on the design of this new measure. The concept of linking employment rights with an individual worker rather than with an employment contract, however, responds to real changes in labour market structures. It remains to be seen if, and to what extent, social partners and policymakers will be able to agree on a common position, especially because claims by employers that they will use the discussions to dismantle employment protection will inevitably provoke strong union resistance. A smartly designed tool to effectively reorganise public employment services, however, might really be the paradigm shift that the government desires.

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