Daily Times

PARIS: When the global financial crisis erupted in 2008, some expat French bankers who lost their jobs in London returned home to collect unemployment benefits of more than 7,000 euros ($8,000) a month.

Though an extreme example of French welfare generosity, the maximum jobless payout of 7,130 euros a month for two years — or three if you are near retirement — is a stark reminder of why President Emmanuel Macron wants to overhaul the system.

Having pushed through changes to France’s 3,000-page labor rule book this month, the 39-year-old president, a former investment banker himself, is looking to take on the opaque world of unemployment insurance in the weeks ahead.

The aim is to spur those who lose their jobs to get back to work more quickly and fill France’s growing number of vacancies, part of what Macron terms “an unprecedented transformation of our social model and economy”.

Apart from the Communist-rooted CGT, most unions have not bothered to demonstrate against the labor law and the few demonstrations there have been – including by truckers on Monday – have struggled to get media attention.

But Macron knows unemployment benefit changes are likely to encounter stronger protests, and also infuriate employers.

While usually on opposite sides of debate, France’s unions and employers are both protective of their decades-old grip over a system worth billions of euros which they manage.

“We don’t want this to become an attack on joint management because we think we have shown we can manage unemployment insurance,” said Michel Beaugas, head of labor policy at Force Ouvriere, France’s third largest union.

The government has little control over how much and for how long the unemployed receive benefits, which are negotiated by unions and employers every two to three years.

Macron wants to bring the benefits fund, known by its acronym Unedic, under state control, arguing that the government should have “more than a word to say” since it guarantees the fund’s 30.5 billion euros ($36.5 billion) of debt.

For the unions, retaining a say in how Unedic is managed is equivalent to staying relevant. Membership is already among the lowest in the developed world and declining and the labor reforms have weakened their power to negotiate for employees.

Though employer federations feel less threatened, they too are reluctant to see the system slip from their grasp.

“Since workers and employers pay in contributions for unemployment, I prefer that we keep it under our control,” said Pierre Gattaz, head of the employers’ federation, Medef.

Examples of generous benefits for laid-off bankers may grab headlines, but they are more the exception than the rule.

Those covered by Unedic — which insures 2.8 million people out of a total jobless pool of 3.5 million — get benefits worth 67 percent of their previous income, slightly below the average of 69 percent across the European Union, according to a study by the French Treasury published in December.

Moreover, almost all of their benefit income comes from jobless insurance, while many other countries offset lower benefits with separate allotments of aid, like family allowances in Britain or tax exemptions in Germany, the Treasury said.

Though France stands out for its maximum jobless benefit of 7,130 euros per month before tax, the average gross payout is a more modest 1,200 euros, according to the state employment agency, known as Pole Emploi. The main problem is that incentives are not structured towards getting people back to work quickly, with most payments running for up to 24 months, longer than all other EU countries except Belgium and the Netherlands, the Treasury said.

High unemployment — France’s jobless rate has stood above nine percent for six years, although it is showing signs of a decline — rather than careless generosity is the main cause of Unedic’s 3.6 billion euro shortfall, experts say.

Unedic expects the gap to narrow rapidly in the coming years as the economy picks up jobs are created. And if Unedic weren’t required to finance two-thirds of the state employment agency’s budget — an annual cost of 3.3 billion euros — it would already be close to breaking even. Unions and employers are anxious to see what Macron has up his sleeve when it comes to unemployment benefits, with only broad indications since May’s election of reform plans. During the campaign, Macron said he would extend coverage to entrepreneurs and the self-employed, while workers would get the right to resign every five years and retain benefits. In exchange he wants to tighten the rules, stopping benefits if a person turns down more than two good job offers.

Published in Daily Times, September 27^th 2017.