Early retirement for jobs scheme (ARPE) under renegotiation

Download article in original language : FR9811143NFR.DOC

In late 1998, France's social partners have been renegotiating the ARPE scheme, under which employees take early retirement in exchange for the recruitment of new employees. Employers have agreed to negotiate on condition that the government does not interfere in the funding of the scheme.

During intersectoral negotiations in October 1995, trade unions and employers' organisations came up with the ARPE (Accord préretraites contre embauche, ARPE) scheme, which allows workers who have paid unemployment benefit security contributions for 40 years to retire, provided that their employer hires a new employee to replace them. According to the latest figures from the National Union for Employment in Industry and Commerce (Union nationale pour l'emploi dans l'industrie et le commerce, ), which runs the unemployment insurance scheme, some 122,000 people have taken advantage of ARPE over three years. It has created 111,000 new jobs, 99% of which have been permanent contracts. The agreement has to be renewed by the end of 1998.

The Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) - as the CNPF employers' confederation has recently been relabelled (FR9811140F) - has agreed to renew ARPE and to extend it to employees who began their working lives at the age of 14 or 15. It stressed that the provisions adopted must be compatible with the financial situation of UNEDIC. However, although UNEDIC's surplus for 1999, forecast to be a little over FRF 1 billion, was calculated on the basis that the agreement would be renewed, no allowance was made for its expansion, which will cost FRF 2.1 billion over a year. Overall, UNEDIC puts the total cost of the renewal for 1999-2000 and expansion of the agreement at FRF 27.3 billion. This is in addition to the FRF 30.9 billion in early retirement benefits to be paid between 1995 and 2003 to workers retiring before the end of 1998.

In a move to demonstrate the independence of the social partners from the state, MEDEF rebuffed a financial aid package of FRF 40,000 per worker per year proposed by the government (FR9710169F). The employers' organisation stressed that "the scheme must remain jointly managed, overseen and financed by the unemployment insurance system. "It specified that a new employers' contribution that for ARPE would be set up.

On the trade union side, the CFDT, with regard to the possible future financial contribution from the government and in the absence of an intersectoral agreement on its implementation - a likely situation given the fact that MEDEF will oppose government assistance - has suggested that state assistance be determined through sector-or even company-level agreements. In addition, the principle of a specific contribution from user companies has been put forward in all scenarios, given the impact on human resources. The CFDT will not accept any cut in the present benefit level - 65% of the reference salary.

The secretary general of the CGT-FO, Marc Blondel, said that he was satisfied with the fact that MEDEF had given the go-ahead to negotiations on ARPE. However, he was concerned about whether UNEDIC would be able to shoulder the funding of such a scheme: "If it is not possible using the resources that we have now, we will have to move towards an extra employers' contribution that will remain minimal." He added that "hardly ever have we hit on anything quite as successful as ARPE in getting young people to work."

The CFE-CGC said that it was dubious about "the way a future expansion of the scheme to include employees who began their working lives at 14 or 15 would be funded." It was happy to see that MEDEF had approved negotiations on the expansion of ARPE. However, it stressed that the jointly-managed Employment Fund, which is at present solely funded by UNEDIC, must find other sources of funds. The effects on job creation among young people - not covered by the unemployment insurance scheme - is so great that the government must now start contributing financially. This contribution should be in the order of FRF 60,000 for every job created through early retirement. The CFE-CGC also said that the extra employers' contribution for companies using ARPE - proposed by MEDEF itself - should also be considered seriously.

The CGT also stated that it wanted to see the agreement renewed and improved: In our view this should be done by looking for the necessary extra funding so as not to jeopardise benefits for unemployed workers. We should consider here that companies have made significant payroll savings on all those who took early retirement. If we introduced a corporate contribution, we could improve the existing rules by broadening the criterion for eligibility to the scheme by lowering the age criterion and also the required length of service.