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France

3 April 2017

France: social partners agree changes to the unemployment insurance system

On 28 March, at cross-industry level, the social partners agreed on the contents of the new unemployment insurance agreement, which sets the rules for unemployment benefits. To reduce the deficit in the unemployment insurance system, the social partners have agreed on several compromises, such as increasing the contribution paid by employers and reducing the length of time during which unemployment benefits are paid to those aged 50 and over.

One of the issues in the negotiations, which were aimed at reducing the unemployment insurance deficit (EUR 4 billion per year), concerned fixed-term contracts (FTC). The trade unions wanted a reduction in the use of short-term contracts, for example by introducing a bonus/penalty system encouraging employers to hire staff under permanent contracts, as demanded by the Force Ouvrière (FO) confederation. On this point, the trade unions were unsuccessful due to determined opposition from employers in certain sectors that make extensive use of short-term contracts. However, a compromise was found, which firstly involves the launch of negotiations in those sectors that most heavily use FTCs. These will aim to find solutions that can secure career paths and, where appropriate, regulate use of FTCs. Secondly, employers have agreed to an increase in their contribution to unemployment insurance. An exceptional contribution of 0.05% will therefore be made for the duration of the agreement (maximum of 36 months). On the other hand, the additional contribution for very short FTCs (up to three months), introduced in 2013, has been scrapped because it is ineffective in tackling job insecurity.

The biggest saving will be made in relation to older people. Currently, people aged 50 and over who register as unemployed enjoy a longer benefit period than other age categories (24 months). The social partners have decided to apply this maximum period of 24 months to those aged between 50 and 52 years. Between 53 and 54 years, the benefit period will be reduced to 30 months, but will remain at 36 months for those aged 55 and above.

The agreement, which has been accepted by the employers’ organisations, has been signed by the CFDT and the CFTC. It is due to be signed by the CFE-CGC and FO, whereas the CGT does not have to ratify it. Once officially signed, the agreement needs to be approved by the government, which will occur after the presidential elections in May. The trade union organisations are taking some satisfaction from having been able to steer this process in a political context in which certain presidential candidates are proposing that the State takes back control of the unemployment insurance system.

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