New employee savings legislation finally passed
February 2001 saw the adoption of new legislation reforming employee savings schemes in France. This followed a lengthy period of disagreement between the two chambers of parliament. The main aim of the new law is to increase the scope and duration of employee savings schemes, by extending them to employees of small and medium-sized businesses and increasing the "lock-in" period for employee savings from five to 10 years.
On 4 October 2000, the National Assembly passed a bill on the reform of employee savings schemes (FR0011103F). On 9 November, the Senate, which is controlled by the conservative opposition, passed a substantially reworked version of the bill that significantly altered its original rationale. On 12 December, the joint ad-hoc committee responsible for facilitating compromise between the two chambers of parliament in cases like this one, failed to make headway. On 16 January 2001, the National Assembly reintroduced its previous provisions at second reading and passed the bill. The draft legislation then received a second reading in the Senate, which finally adopted it on 8 February.
The main provisions of the new law aim to increase the scope and duration of employee savings schemes. First, employees of small and medium-sized businesses, who were only marginally affected by previous provisions, will now be covered by a new "inter-company savings scheme" (Plan d'épargne interentreprises, PEI). Second, the creation of a "voluntary partnership employee savings scheme "(Plan partenarial d'épargne salarial volontaire, PPESV) extends the lock-in period for employee savings from five to 10 years and turns a short-term savings mechanism into a medium- or long-term scheme.
The original bill was challenged on two fronts. Conservative parties advocated a more assertive statement on the scheme's "pension-related" targets, and the Senate added an amendment to the bill specifying that "French-style" pension funds are to be set up. At the other end of the political spectrum, the Communist Party - together with several trade unions, including CGT and CGT-FO- criticised the extension of a scheme which is not subject to social security contributions (and especially pension contributions). They claimed that this mechanism would weaken the compulsory "pay-as-you-go" pensions system.
The government wished to remain ambiguous on the first point. Under the law, employee savings remain based on a non-compulsory system providing for full withdrawal rights at the end of a the 10-year lock-in period. The government compromised on the second issue by implementing a 8.2% deduction (equivalent to pension contributions) on the portion of employer top-up payments to savings schemes exceeding FRF 15,000. This concession ensured that the Communists would support the bill at first reading in the National Assembly. Nevertheless, in reality, this clause will have little effect, since it is highly unlikely that employer top-up payments will attain this level. The Communists, who are probably aware of the minor impact of the government's compromise, were keen to highlight their disappointment by abstaining from the second reading vote.
Other factors have also fuelled public debate on the employee savings issues. First, a report on a study conducted by a team from the IRES and CNRS research institutes, published in autumn 2000, highlighted the blurred line between company pay and savings policies ("Retraites et épargne salariale - les initiatives d'entreprises" [Retirement and employee savings - company initiatives], IRES/GREE-CNRS, September 2000). In addition, a study from the INSEE national statistical institute which appeared in late 2000 confirmed the unequal spread of employee savings ("Détention de patrimoine des ménages" [Household assets], EPCV, May 2000).
In early 2001, the efforts of the Minister of Economy, Finance and Industry, Laurent Fabius to build consensus around the employee savings bill came up against a change in economic fortunes and the hardening tone of political debate which is emerging in the run-up to the 2002 presidential election. In his final speech in support of the bill, the Minister focused on other aspects of his proposed legislation: the long-awaited strengthening of collective bargaining on employee savings; and the provision for employee-shareholders holding 3% or more (down from 5%) of a company's stock to have a representative on the board of that company.
The centrepiece of the conservative parties' current political campaign is the "urgent" need to overhaul the pensions system, and they judge the new employee savings law to be inadequate in this respect. Moreover, the downturn in the stock markets and the return of the "wage issue" (FR0009191F) has meant that the essence of the debate on employee savings has changed since it started.