the reduction in the duration of compensation comes into force on February 1

The reform, which comes into force on Wednesday, aims to modulate the conditions of unemployment insurance according to the situation of the labor market, with the aim of having rules “more encouraging to the resumption of employment”. The executive justifies it by the recruitment difficulties of companies, and makes it a first stone of its strategy to achieve full employment in 2027, i.e. an unemployment rate of around 5% (against 7.3% currently).

“end of rights supplement”

The reform provides for a 25% reduction in the duration of compensation for all jobseekers who open rights from February 1. It will not apply in Overseas France and certain populations are excluded, such as entertainment workers, fishermen or dockers. An unemployed person who would have been entitled, for example, to 12 months of compensation under the current system will only be entitled to nine months. Seniors drop from a maximum of 36 months to 27.

A minimum floor of six months will be preserved. The first impacts are therefore expected from August 1st. For job seekers who will see their duration of compensation reduced, an “end of rights supplement” (an extension of the duration) is provided for in the event of a deterioration in the labor market, if unemployment exceeds 9% or it increased by 0.8 points or more over a quarter.

The government hopes for 100 to 150,000 additional job returns in 2023 thanks to the reform. These arguments are strongly rejected by the unions. The latter are all the more dissatisfied as Unédic, a joint body which manages the unemployment insurance scheme, recently drew up an initial assessment of the previous unemployment insurance reform, launched in 2019 and fully entering into force at the end of 2021. This reform has tightened the conditions of compensation for job seekers, in particular those who alternate periods of work and inactivity. According to Unédic, it resulted in an average drop of 16% in daily allowances for the unemployed affected.

Further developments to come

The government must send the social partners in early February a guidance document so that they work on a new governance of the system. The trade unions and employers’ organizations are in favor of this negotiation to clarify the responsibilities of the State and the social partners. Unemployment insurance is managed by the social partners who manage Unédic. But since the law of 2018, their margins of negotiation are restricted by a “framework letter” from the government which sets objectives (in particular savings) to be achieved.

Some macronists plead in particular for the Parliament to be associated. For the elected Renaissance Marc Ferracci, “governance must allow a new balance between social partners, State and Parliament, in order to respect a principle of political responsibility. Today, the social partners are not held responsible for unemployment, whereas “they have levers to act because the rules of unemployment insurance have an impact on unemployment and precariousness. Those who are held responsible are the government and the parliamentary majority”.

Once this new governance has been adopted, the social partners will – as usual – have to negotiate a new compensation scheme which will be in force from 2024. This would coincide with the creation of France Travail to better coordinate the actors intervening on the job.

The government has already indicated that the question of modulation according to the economic situation “will have to be integrated” into these discussions. In the explosive context of the pension reform, the executive announced the temporary withdrawal of a controversial part of its project which provided for a possible reduction in the duration of compensation by 40% if unemployment drops below 6%. But, warned the Prime Minister, “we will put this subject back in the consultation on the future rules of unemployment insurance”, Elisabeth Borne considering that it is “the good rule of compensation”.