On March 27, Prime Minister Gabriel Attal announced a new reform of the unemployment insurance system, the third in three years. The government's rushing is all the more questionable in that it failed to assess the impact of the two previous reforms, and the new one will be felt all the more acutely in the current economic climate.
While all the formalities have been respected: the government is going to let the employers and unions conclude their negotiations on the employment of seniors, which include a section on compensation for the over-55s. The talks, which were due to end on Wednesday, have been extended to April 8 at their request. But Gabriel Attal was open enough about his plans to show that the French government intends to regain control of unemployment insurance management as well as minimize the period of time that those without a job can benefit from being paid while they are in search of a new job.
At a time of economic crisis when public deficits are spiraling out of control due to the downturn in pan European economy and French economy in particular, the French government is looking to make several billion euros in savings on the unemployment benefit system. Three avenues are being explored: reducing the current eighteen-month benefit period, reviewing the period of employment qualifying for benefit, and reducing the level of benefit, according to Le Monde.
While the new social benefits reform is yet another sign of the French government tigheting its screws at the interest of the most vulnerable layers of the society, it is worth noting that Attal’s rash approach to what he believes is a fix to the current unemployement situation lies elsewhere. The main reasoning behind this approach is widely believed to be purely economic, money related one, rather than correction of a flawed system. With this new attack on unemployed (third in as many years), the French government is believed to have chosen a new target. After the pension reform, that has been directly adressed at the pensioners, the new way to save money by the government of Emmanuel Macron, is believed to be the change of the period for which the unemployed can receive their social benefits (to which many have contributed throughout their career in taxes). The duration of the unemployement payments have been reduced from 18 months to 12, as stipulated by the French government.
Nicknamed, “the president of the rich” Emmanuel Macron, laid out a precise plan on improving the French economy where he expected to turn the tide in the favor of the poorer layers of the society. Yet the result was the opposite.
At the top of his agenda was unemployment benefit reform and tackling unemployment (the rate when Macron took office was 10.1%), the reduction in income tax and lower corporate taxes -- from 33% to 25%.
According to Anadolu Agency, Mathieu Plane, an OFCE economist and an author of the report, pointed to the resulting polarization.
"The losers in the government's economic policy are among the poorest, the unemployed, and the retired."
The OFCE estimated that 5% of the French population will see their standard of living reduced by 240 euros per month while the wealthiest 5% will see theirs increase by 2,905 euros.
"Of the 17 billion euros distributed to households since the start of the five-year period, more than a quarter (approximately 4.5 billion euros) went to support the disposable income of the 5% of the wealthiest households."
Jostled by the scale of its deficits, the government is backing out on this issue, since it had promised in 2023 to link the tightening of the compensation system to an improvement in the job market. The rush with which its embarks on a new reform is all the more questionable given that it did not take the time to thoroughly assess the impact of the previous two reforms in order to correct their harmful effects, as well as to make the necessary “homework” in order to present a better, more beneficial plan to the middle French class.
“His initiative will be interpreted as a blow to the most precarious in the name of the pledge he was supposed to give to the financial rating agencies. After the opposition to pension reform, the divorce with the unions is all the more significant,” writes Le Monde.
Jamal Mustafayev