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Thursday, December 1, 2022

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in a context of inflation, is this the right time to push through the reform?

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The Minister of Labor Olivier Dussopt receives the social partners this Monday morning to detail the new rules for unemployment insurance compensation. If the labor market is dynamic, with an unemployment rate of 7.3%, the conditions for compensation will be tightened with the passage of this reform. From February 1, 2023, for newcomers to unemployment, a reduction coefficient will be applied if the economic situation remains similar to that of today: for example, the maximum duration of compensation of 24 months will be reduced to 18 months for those under 53.

The new rules will come into effect at a time of economic uncertainty

An active person who has worked 12 months over the last two years will be entitled to nine months of allowances against 12 currently, if the employment dynamic is good. If it is bad, the current duration of 12 months for 12 months worked over the two previous years remains the rule. In addition, the conditions for entry into the unemployment insurance scheme will remain the same: six months of work over the last two years. Just like the level of compensation.

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On the other hand, the government seems to be going back on its promise to make the conditions for compensation more generous in the event of an unfavorable economic situation. In this case, the compensation conditions will be those currently prevailing. The consultations led by Olivier Dussopt did not lead to an agreement with the social partners, who fear the turn of the screw itself as much as the timing of this reform.

Very weak growth in 2023

Despite a fairly low unemployment rate, clouds are gathering over the French economy. Inflation gallops and nibbles the purchasing power of the French, whose wages increase more slowly than prices. The OECD also expects very weak growth in 2023, which should slow job creation. Another difficulty in perspective: the government will eliminate its rebate at the pump and make its tariff shield on gas and electricity prices less protective.

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According to the economist Éric Heyer, the moment chosen by the government for its reform is not opportune: “The situation is turning around, we should have very weak growth in 2023. There will therefore be destruction of Thinking about a cyclical reform to encourage the unemployed more to return to work why not, but I think it’s not the right time to do it. As a reminder, the executive is aiming for full employment in 2027, i.e. an unemployment rate of 5%.

Source: Europe1

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