PARIS (Reuters) – France’s government is looking to shorten the period people can claim unemployment benefits to strengthen incentives to work as it struggles to keep its deficit reduction plans on track.
WHAT DOES THE REFORM SEEK TO DO?
The government considers that previous efforts to rein in unemployment benefits did not go far enough and a new push is necessary to get more people back into jobs.
Prime Minister Gabriel Attal has suggested unemployment benefits could be limited to 12 months from up to 18 months or more currently and that people would have had to work longer to be eligible.
He has put the onus on employers’ federations and unions, who are deeply opposed, to come up with proposals in the coming months so that the changes can be passed into law in the autumn.
A 2023 reform already allowed for benefit duration to vary depending on labour market conditions, the idea being that it should be shorter if jobs are readily available.
The latest reform aims in particular to get more older workers into jobs as long-term unemployment tends to increase with age.
WHY IS A NEW REFORM NEEDED?
After decades of stubbornly high unemployment, President Emmanuel Macron has promised to cut joblessness to 5% by the end of his five-year term in 2027.
While current 7.5% unemployment rate is close to a 40-year low, Finance Minister Bruno Le Maire, who has been leading the calls for the reform, says that the rate will not go much lower without another push on benefits.
The aim is also to lift France’s employment rate which at 68.5% is lower than many other EU countries and significantly lags Germany at 77.4%.
Le Maire frequently argues that bringing employment up to German levels would boost overall tax income and payroll contributions, helping to significantly reduce the public sector budget deficit.
Ratings agencies and France’s EU partners are watching closely as the government struggles to meet its deficit reduction targets after overshooting in 2023.
HOW DO FRENCH UNEMPLOYMENT BENEFITS COMPARE?
The government says French benefits are more generous than those in other countries.
An unemployed worker 53 years old or less gets up to 18 months of benefits plus six months if jobs are scarce. The duration extends to 22.5 months plus 7.5 months for workers aged 53-54, and 27 months plus nine months for those over 55.
Other European countries such as Germany, Finland, Luxembourg, Portugal and Switzerland also modulate the duration according to workers age. Some countries also take into account how long people have previously worked as well as whether they have dependents.
The duration in France is roughly in line with other European countries like Italy, the Netherlands and Spain where it can reach up to 24 months, according to UNEDIC, the French unemployment insurance fund.
With French jobless benefits covering 57% of previous earnings, they are similar to what is found in other European countries except that others set lower ceilings while the monthly maximum in France is 8,359 euros.
