Social partners put short-time work reform into practice

A national cross-sectoral agreement was signed on 13 January 2012 by the French social partners, with the exception of the General Confederation of Labour, to make short-time work easier to access for companies. Negotiations took place against a background of economic decline, with unemployment at its highest level for 12 years in November 2011. The new agreement does, however, ensure employees on short time will not be penalised when bonuses and leave entitlement are calculated.

New agreement

The new agreement reached in January 2012 on short-time work is seen as the first step towards negotiating a structural reform of the French labour market to simplify the short-time work scheme, to make it more accessible to companies in difficulty. The social partners have already arranged three working meetings between now and 7 March to discuss this reform, which has been called for by all negotiating parties.

Emergency measures

Several provisions contained in the January 2012 agreement reiterate measures already negotiated by the social partners in 2009, but which ceased to have effect on 1 January 2011.

The new agreement protects the bonuses and leave entitlement of employees on short time work by stating that the part of their short-time allowance financed by the company – to which state contributions are added – must be calculated to make up for any shortfall in bonuses or overtime premiums.

The period spent on short-time work is also to be taken into account in its entirety when calculating entitlement to paid leave. In addition, the agreement requires employers to neutralise the effects of short-time work on bonuses that are paid under employee financial participation schemes. When bonuses are normally linked to salary level, the agreement requires companies to take into account the salary that those concerned would have received if they had not been on short-time work.

Agenda for structural reform

Apart from these emergency measures, the signatories have put several demands to the government, to try and make recourse to the short-time work scheme easier.

  • Employees should be able to benefit from training during non-working hours, rather than just during work time. This would allow broader training opportunities, the chance to obtain a qualification, or to complete a skills assessment or validation of prior experience (VAE).
  • The short-time work allowance paid to employees undergoing training should be increased to 100% of their net salary.
  • Currently it takes 20 days for a company’s request to move employees onto short-time working to be accepted, and the agreement calls for the administration to cut this to ten days. The government has agreed, and is considering abolishing altogether the need for a formal request and replacing it with a simple declaration.
  • Social partners have also asked for the extension of the scope of the ‘exceptional circumstances’ that allow companies to introduce short-time work without prior authorisation from the administration. Currently reserved for catastrophes and exceptional situations, this option could be opened up to companies experiencing a pronounced and sudden downturn in their activity.
  • The agreement also provides for speeding up the transfer of state-funded short-time work allowances to companies, so that businesses no longer have to pay out money in advance;
  • Finally, the signatories would like to see the maximum annual quota of short-time work maintained at 1,000 hours, as has been the case since 1 January 2010.

Reform urgently needed

The effort of social partners on this issue came in response to recent criticisms of the French short-time work scheme, particularly about how poorly it compares to those operated by some European neighbours.

Although the take-up of the short-time work scheme increased rapidly at the height of the financial crisis, as underlined by a recent study (in French, 684Kb PDF) by the Statistical Department of the Ministry of Labour (DARES), the Court of Accounts published its annual report (in French, 122Kb PDF) in February 2011, showing that only 0.8% of French employees benefited from short-time work compensation when the crisis was at its worst, compared to 5.6% of Belgian employees and 3.17% of employees in Germany.

The Court blames inadequate support for businesses and the ‘complexity of the legal framework’ of the short-time work scheme.

In December 2011, a report by the Employment Policy Council recommended that each enterprise facing difficulties should be able to ‘benefit from a single scheme instead of three, and from procedures that are simpler than at present’.

At the beginning of January, the Ministry of Labour also proposed unifying the current three schemes in a single arrangement, and adopting a series of administrative simplifications.

The social partners have also put forward proposals. As reported in Les Echos, the General Confederation of Labour (CGT), which refused to sign the new agreement, adopted its own reform plan on 6 December 2011 asserting that the short-time work scheme ‘does not give sufficient incentive to employers in difficulty who remain responsible for up to 50% of employees' wages’.

References

RISO, S. ‘Le chômage partiel français au regard des expériences européennes’ (‘The French short-time work scheme in the light of European experience’), Liaisons Sociales Europe, No. 285, 22 September, 2011

Liaisons Sociales Quotidien No. 15799, 21 February 2011

Liaisons Sociales Quotidien No. 15991, 7 January 2012

Liaisons Sociales Quotidien No. 16015 10 January 2012

Frédéric Turlan, HERA

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