MEDEF makes proposals for social protection reform

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In November 2001, France's MEDEF employers' confederation issued proposals for the reform of the social protection system. They clearly reflect the organisation's desire to separate employment-related social protection from those aspects of welfare that have been extended to the whole population. MEDEF also proposes a 'new architecture' for sickness insurance. The overall trade union reaction to MEDEF's proposals was negative.

On 20 November 2001, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), tabled a paper setting out proposals for 'the reform of the social protection system' (FR0112153F). MEDEF's proposals hinge on the desire to separate two types of coverage.

MEDEF's proposals

In a statement to a MEDEF regional forum devoted to the issue of 'companies and risk coverage', Ernest-Antoine Seillière, the employer organisation's president, asserted that companies and their stakeholders should be responsible for covering employment-related risks (accidents, pensions, unemployment and vocational training), whereas protection against risks which are related to universal rights and have become open to all (sickness, social exclusion and family assistance) should no longer come under the jurisdiction of companies. Instead they should fall under 'national solidarity'.

Protection related to the first group of employment-related risks should be funded through social security contributions and overseen by the social partners. Protection related to the general risks falling under 'national solidarity' should be provided and overseen by the state, preferably by expanding the 'universal social contribution' (contribution sociale généralisée, CSG), which is levied on all income (FR9710170F).

The MEDEF paper sets out specific proposals – some new some, some less so – on every area of social protection, with the exception of unemployment.

On the issue of family-related welfare, MEDEF's paper states clearly that 'companies are not seeking any role in the definition of family benefits.'

As for pension-related welfare, MEDEF reasserts and, on occasion, fleshes out its existing proposals. While the organisation states that its goal is to preserve the 'pay-as-you-go' system (whereby current pensions are met out of the contributions of present employees), it also seeks the creation of 'voluntary capitalisation-based pension schemes' (whereby individual employee's contributions go towards their own pensions). MEDEF considers that the parameters used in calculating pensions must be 'slowly and progressively adjusted to take account of changes in life expectancy'. It also contends that 'a personalised pension scheme should be set up'. Only one relatively new proposal – a 'single, points-based pensions scheme'- appears in the paper. This plan would do away with the AGIRC and ARRCO supplementary pension schemes (FR0102134F) and totally alter the way in which pensions under the basic state scheme are calculated. Lastly, as expected, MEDEF is demanding that the calculation of civil service pensions be brought into line with those in the private sector.

The proposals concerning sickness, industrial accident and occupational illness coverage set out in MEDEF's paper are more fully fleshed out with new content.

MEDEF rejects both any form of state control and the total privatisation of sickness insurance coverage. The organisation is, however, suggesting that a 'measured dose of competition' be introduced into the system. MEDEF reasserts its commitment to the universality, non-selective nature, life-long availability and social security-based funding of the system. A 'basket of medical care fully covered by the scheme' should be put in place, selected by the state and approved by parliament. Any medical care 'not included in this basket could be covered by voluntary insurance'.

In providing this 'basket' of medical care, there would be competition between various 'care operators chosen by current sickness insurance funds, insurance companies, mutual top-up insurance providers, provident funds or companies'. These 'care operators'- funded according to the number of individuals covered - would be required to follow 'specific guidelines developed by the government'. They would be required to negotiate costs and types of care with care providers. Companies - together with their employees - would choose the operators to cover their workforces 'on the basis of a tender system'. Companies would remain responsible for defining the scope of the top-up coverage they want their employees to have.

The MEDEF paper also sets out new proposals for industrial accident and occupational illness insurance. MEDEF asserts that 'the social partners should be made responsible for negotiating the terms and conditions of the definition of the accidents and illnesses to be covered by mandatory insurance.' Companies would be 'free to select the organisation they wish to provide coverage'. Compensation, which is currently provided on a fixed-amount basis, would be based on actual hardship incurred.

Trade union reactions: mainly negative

In the opinion of the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO), 'by making health and pensions profit-generating commodities and by pushing these proposals onto the election campaign stage, MEDEF is adopting a Berlusconi-type approach.'

In the view of the General Confederation of Labour (Confédération générale du travail, CGT), 'MEDEF's plan challenges the basic principles of the social security system.' Implementing these proposals would in the long run lead to 'differing treatment for people covered by social security based on their financial situation'. As a result, 'a debate is required on reform of the welfare system to offset pressure from employers' associations.'

The National Federation of Independent Unions (Union nationale des syndicats autonomes, UNSA) considers that 'MEDEF is now at last showing itself for what it really is, ie an employers' organisation headed by hard-line finance and insurance industry free-traders.' Were MEDEF's proposals to be implemented 'the health of ordinary people would become nothing more than a vulgar market, in which the most well-off would be able to shop around for care.'

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) stated that 'we are no longer dealing with a mere challenge to our social protection system but rather an attempt to blow it apart. These uselessly provocative and unacceptable proposals would destroy all form of solidarity between ordinary French people and therefore the cement that bonds the nation.' CFE-CGC also maintained that it 'failed to see how private operators would have lower costs than the existing social security system, given that they would be required to provide dividends to their shareholders'.

The French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC) contends that MEDEF's 'purpose is to give company interests precedence over those of the population or the common good ... it is a matter of paving the way for a flourishing trade in social protection.'

The French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) rejects any 'knee-jerk' reaction, in favour of a 'a fact-based judgment'. It believes that in asserting the principles of 'universality, non-selectivity and respect for the role of the state, the employers' association is sweeping its old demons under the carpet.' In the opinion of CFDT, 'the whole idea becomes less palatable when the employers' association suggests opening sickness insurance up to multiple operators, which is likely to be perceived as a move to privatise the social security system. MEDEF has carefully avoided detailing how its proposals would make the system more efficient for employees.'


Given that MEDEF pulled out of the boards overseeing the various general social security funds in summer 2001 (FR0107167N), the organisation felt compelled to put forward proposals on social protection issues. The paper mainly reiterates existing MEDEF ideas on family and pension-related issues. On the question of sickness insurance, it sets out proposals, which although they have some intellectual merit, would cause major practical problems if they were implemented, in particular because such a move would clash with French healthcare professional culture.

It appears that the issue for MEDEF is not really one of seeing all of its proposals implemented in the near future but rather one of pushing for increasing private sector involvement in sickness insurance. In the light of this fact, MEDEF's proposals relating to industrial accidents and occupational illness are of particular interest. Shifting from the current piece-meal compensation system to an all-inclusive scheme makes sense when one takes into consideration: the changing structure of employment and therefore by extension of social protection coverage and occupational hazards; and the current role played by the insurance industry within MEDEF - to the detriment of representatives of more traditional industries. (Pierre Volovitch, IRES)

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