France: Latest developments in working life Q4 2019

The second round of pension reform consultations and the introduction of the bonus–malus system for unemployment insurance are the main topics of interest in this article. This country update reports on the latest developments in working life in France in the fourth quarter of 2019.

Pension reform hotly contested

From September to mid-December, a second consultation round on the government’s proposal to set up a universal points-based pension system took place with the social partners, professional organisations and citizens. Not satisfied with the results of the consultation, the unions called for two days of inter-professional strikes and demonstrations that took place on 5 and 10 December. In addition, an unlimited strike began at the French National Railway Company (SNCF) and the Autonomous Parisian Transportation Administration (RATP) on 5 December. For the SNCF, the start of the fifth week of the strike on 2 January marked the start of the longest strike in the company's history. ^[1] Strike action also took place in the energy sector, in air transport, in urban transport and road transport of passengers and goods, as well as among lawyers and in the refineries.

Prime Minister Édouard Philippe unveiled an outline of the reform on 11 December announcing that a pension reform bill would be presented to the Council of Ministers on 22 January 2020, with debates to be held in parliament at the end of February. In broad terms, the prime minister's announcement echoed the conclusions of the report submitted by High Commissioner for Pensions Reform Jean Paul Delevoye in July 2019 with a few modifications, such as postponing the initial timetable for the introduction of a ‘pivot age’ of 64 years (the age that workers would need to reach before receiving a full pension) from 2025 to 2027. This modification would mean that workers could still retire at 62 years of age, but the amount of their pension would be reduced. On the other hand, those retiring after the age of 64 would be able to receive a higher pension. ^[2] This modification, which was not included in President Emmanuel Macron's programme for the 2017 presidential election, was presented by the government as a sound management measure to guarantee the financing of the future pension system. This provision has been denounced by the French Democratic Confederation of Labour (CFDT). In favour of a universal points-based scheme, the CFDT had warned that it would refuse any budgetary measures in the framework of this systemic reform focusing on the financial balance of the system.

Discussions took place between the government and the unions on 18–19 December. While this led to some amendments to the reform, not all social partners supported them. As the strike rolled into the end of December, it was reported that it was the longest transport strike in three decades. ^[3] At the same time, the government conceded adjustments to several autonomous or special pension schemes and even maintained some schemes in full (for example, for the police), which blurred its message about the universality of the new system.

The government scheduled new consultations from 7 January 2020.

Bonus–malus system for unemployment insurance

While the first provisions of the unemployment insurance reform came into force in November, the government published an order on 4 December to establish the list of sectors of activity concerned by the bonus–malus applicable to employers' unemployment insurance contributions. Under the bonus–malus system, companies in seven sectors of activity will see their unemployment insurance contributions for employers change according to their rate of employment contract terminations, compared with the median rate for their sector. The seven sectors are:

• manufacture of food, beverages and tobacco products
• other specialised, scientific and technical activities
• water production and distribution, sanitation, waste management and decontamination
• accommodation and catering
• transport and storage
• manufacture of rubber, plastic and other non-metallic mineral products
• woodworking, paper and printing industries

From 2021 onwards, company contributions will thus vary between 3% and 5% of their pay-roll, compared with a rate of 4.05% today. The Ministry of Labour set up a simulator on its website on 23 December to provide companies targeted by the bonus–malus system with initial indicative data. However, the measure is still contested on the employers' side. On 27 September, nine employer organisations announced that they had filed an application with the Council of State against the bonus–malus scheme. They warned that that such a measure could weaken the competitiveness of seven sectors of activity and affect more than one million employees.

• French government: Arrêté du 27 novembre 2019 relatif aux secteurs d'activité et aux employeurs entrant dans le champ d'application du bonus–malus

Commentary

Due to the gilets jaunes (yellow vest) crisis, the government slowed the pace of its pension reforms, allowing more time for consultations with social partners and citizens. However, the introduction of cost-cutting measures to guarantee, according to the government, the future of the pay-as-you-go pension scheme has led to strong opposition from all of the trade union organisations. Even those in favour of the reforms feel that they are not being listened to and are only being consulted on a formal basis and have no influence over the design of the reform. Moreover, the concerns of the unions and the sometimes contradictory announcements of the government undermined the public confidence in the establishment of a universal pension scheme.