Government proposes reform and decentralisation of 'minimum integration income' scheme

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The French government is due to propose legislation after the summer 2003 parliamentary recess reforming the 'minimum integration income' (RMI) benefit and assistance scheme for people facing labour market difficulties. Much of the responsibility for the scheme is to be decentralised to local level, while a new form of employment contract - the 'minimum employment income' contract - will be introduced for people who have been receiving RMI for two years.

The 'minimum integration income' (Revenu minimum d’insertion, RMI) scheme was created in 1988 after many years of discussion and debate over the need to set up a guaranteed minimum income (FR0007174N). The creation of this benefit was linked to the appearance, in the 1980s, of a new type of poverty rooted in the rise in unemployment and corresponding tightening of benefit eligibility rules. The increasing number of people not eligible for unemployment benefits led to the creation of the RMI as a buttress to the welfare system.

However, the new benefit was neither a universal allowance with no conditions attached, nor another social assistance benefit administered by the local authorities at département level (départements are a geographical unit of local government, of which France has 100, including those overseas), such as those for people with disabilities or the elderly. Rather, it was geared to helping reintegrate those facing difficulties into the workforce. This was to be achieved by providing financial assistance to those whose income fell below a minimum amount, together with concrete assistance in the shape of an 'integration contract'. In the minds of the legislator, integration was, at the time, seen as less the responsibility of individuals, perceived as victims of circumstance, but rather that of society as a whole. This solidarity-based perspective undoubtedly explained the fact that the burden of the benefit was placed on the central state and not the départements. The administration of the 'integration' aspect of the benefit is currently shared by the state and the départements.

Draft legislation to overhaul the RMI is due to be tabled in the National Assembly by the government after the summer 2003 recess. The reform significantly challenges the principles that were the basis for the creation of the RMI 15 years ago. Today, close to 1 million individuals receive RMI benefit, which stands at EU 360 per month - an amount that falls well short of the EUR 560 'poverty threshold'.

Decentralisation of responsibility

In line with recent decentralisation initiatives (FR0304107F), the government's draft legislation will mean that general councils (Conseils généraux), the elected assemblies at département level, will be responsible for approving integration contracts reached with RMI recipients, as well as setting département-level integration policy. As matters currently stand, the central state is also involved in these areas. Scrapping the joint administration process and decentralising the RMI will, the government hopes, give a new lease of life to the 'integration' part of the scheme, whose performance has been far from satisfactory. Indeed, currently, only one RMI recipient in two has signed an integration contract. These are individually designed for each RMI recipient in terms of their health, housing and job prospects. The sign-up rate to these contracts varies significantly (between 20% and 80%) from one département to another, which indicates that integration efforts depend on the particular area and policies implemented

Under the proposals, départements will also have to bear the financial burden of the RMI benefit. To offset this, a proportion of state tax revenue is to be transferred to the départements, but in the long run, they will be required to increase local taxes to cover the cost of the benefit. In real terms, even under decentralisation, the amount of the RMI and the general eligibility criteria will continue to be set by the state. However, the département-level general councils will, to a significant extent, have the authority to decide whether or not an individual receives the benefit, a fact that critics claim seriously challenges the 'Republican principle' of equal access to the RMI.

New minimum employment income contract

The draft legislation also provides for the creation of a new 'minimum employment income' (Revenu minimum d’activité, RMA) contract. For the first time in France, this is a form of employment contract linked closely to a local authority social benefit, in this case the RMI. Only those people who have been receiving RMI benefit for at least two years will be eligible for the new RMA contract - a six-month, 20-hour per week employment contract, which can be renewed twice up to a total of 18 months. Employers may be private sector, public sector or non-governmental organisations, but not the national civil service, département-level general councils or private individuals.

Under the RMA contract, the employee's RMI entitlement will be paid directly to employers, which, in turn, are required to pay the employee for 20 hours' work a week at the rate of the national minimum wage (salaire minimum interprofessionnel de croissance, SMIC). Social security contributions (for unemployment, sickness and pensions), will be charged only on the difference between the RMI and the minimum wage paid by the company to the employee. This will tend to cut the level of welfare coverage for the individuals involved. In real terms, the net cost of an RMA employee to the employer will be EUR 300 per month or approximately EUR 3.5 per hour. This is less than a third of what a an employee paid at the SMIC rate would cost. In light of the financial benefit of the RMA contract to companies, many observers have pointed to the potential danger of companies replacing normal or employment policy-assisted jobs with individuals employed under this scheme.

Commentary

The key issue of the proposed new scheme is to what extent extending the receipt of RMI beyond the two-year period will be conditional on individuals accepting an RMA job. The government's bill appears to disregard this issue but much will hinge on local practices and the monitoring mechanisms that the state retains to protect the rights of benefit recipients. If the obligation to work were to replace the solidarity principle, then this reform would be tantamount to introducing a 'workfare'-type logic into the French welfare system.

Lobby groups opposing social exclusion reacted very negatively to the proposed reform. Apart from the fact that they have been presented with a fait accompli, they take issue with the substance of the government's proposals. They are critical of the underlying philosophy of the changes, which they deem to be overly focused on economic integration and not enough on the overall problem of fighting poverty. They are also afraid that the decentralisation of the RMI will heighten the danger of 'subjective slippage' in benefit eligibility. However, only a few trade unions have come out with a position on the reform. Is this a sign of a relative lack of interest in these issues or, is it simply the result of an industrial relations agenda dominated by pension reform (FR0305103F), a plan which has brought a much fiercer reaction? (Carole Tuchszirer, IRES)

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