Negotiation Launched for New Unemployment Benefit Rules: Will they Evolve?

Will unemployment benefit rules still evolve? In theory, they could. This Tuesday, August 1, the Prime Minister, Élisabeth Borne, sent the social partners a framing letter officially launching the negotiation of a new unemployment insurance agreement by the trade unions and employers’ organisations. The latter will thus have until November 15, 2023 to reach an agreement on the new unemployment compensation rules, which will apply from January 1, 2024.

As a reminder, as allowed by the law of December 21, 2022 “on emergency measures relating to the functioning of the labor market with a view to full employment”, it is the government which exceptionally decides on the rules of unemployment compensation today. today. And this, until December 31, 2023. From January 1, 2024, the social partners will therefore be able to regain control… provided that an agreement is reached on the future compensation rules.

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In theory, all the current parameters could evolve within the framework of this negotiation. This is the case with the method of calculating allowances, the conditions for opening a new right (having worked six months out of the last 24 months, compared to four previously) and the degressiveness of allowances for executives (at the end of the seventh month of compensation, compared to the ninth previously), which were tightened with the reform of unemployment insurance at the end of 2021. Also on the agenda for discussions, the modulation of compensation rules according to the situation of the labor market, introduced with the second reform of 1 February 2023. As a reminder, since this date, the duration of unemployment benefit is reduced by 25% due to an unemployment rate below 9%. And if it goes back above this level or if it increases by at least 0.8 points over a quarter, the previous rules, without a 25% reduction in the duration of compensation, will be reinstated.

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So many measures to which the trade unions would like to return. But in reality, the discussions risk skate on certain points. Because on his side, management is supportive to several measures introduced since 2021. “Reforms desired by the CPME have been implemented by the State, in particular the countercyclicality of unemployment benefits on February 1, 2023 and the new rules for calculating the daily reference wage (SJR) since October 1, 2021. In a context of severe labor shortages, the CPME is very much in favor of these incentive measures to find a job”, writes the Confederation of Small and Medium-Sized Enterprises, in a communiqué sent on June 8th.

The government wants to modulate the rules of compensation according to the unemployment rate

Above all, the government intends to keep some achievements of his reforms. “The principle of countercyclicality is important for us to preserve because it is enshrined in law”, indicates the cabinet of Olivier Dussopt, the Minister of Labour. The executive is all the more attached to it since Emmanuel Macron himself has already mentioned the possibility of tightening the parameters of countercyclicality even further, by setting up an additional level: if the unemployment rate drops to 6% or less, then the duration of compensation could be further reduced. Moreover, maintaining the counter-cyclical nature of the unemployment insurance scheme is one of the objectives set by the government in its negotiation framework letter and which the social partners will therefore have to respect.

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On the other hand, the ministry seems open to a renegotiation of the conditions of eligibility for unemployment insurance. Provided, however, that the new rules meet the objectives set by the government in its framework letter. Thus, if the social partners agree on new compensation rules, these should not degrade the financial trajectory set by the executive and must continue to aim to “fight against job insecurity and promote sustainable employment”, specifies the framework letter sent to the social partners. And this, in reducing employers’ reliance on short contractsan objective already targeted with the 2021 reform.

For example, if the social partners decide to lower the working time required to open a new right and this measure “leads to an increase in short contracts, then the State could do not validate it”, says the entourage of Olivier Dussopt. Indeed, according to the framework document, trade unions and employers’ organizations will have to take care “to avoid the phenomena of alternating short contracts and periods of unemployment”, by guaranteeing in particular that the method of calculating unemployment benefits “does not create incentive more favorable than the current regime […] the splitting of contracts”, that the minimum duration of employment required to open a new right “is a sufficient incentive for employment” and that an “incentive for employers to extend the duration of employment and secondment contracts via the upward or downward modulation of the unemployment insurance contribution rate” – the bonus-malus – is retained.

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New compensation rules to tackle senior unemployment are expected

Trade unions and employers’ organizations will also have a new obligation: “to draw the consequences of the extension of the duration of activity (due to the pension reform, editor’s note) on the rules of compensation for seniors and encourage their return to employment”, can we read in the framing letter. In other words, future unemployment benefit rules will also have to pursue the objective of further supporting the return to work for seniors. “It will be a question of thinking about the reduction of unemployment insurance incentives allowing companies to part with seniors well before the legal retirement age”, specifies the Ministry of Labor.

For example, the latter evoked, for a time, the possibility of reduce the duration of compensation unemployed seniors, currently longer than for other unemployed people (27 months maximum for those over 55, compared to 18 months for those under 53). It remains to be seen whether the social partners will be able to find common ground on this subject… and on all the future unemployment compensation rules. If this is not the case, or if the agreement reached does not meet the objectives set by the government, the latter could take control again on the unemployment insurance scheme and decide by decree to extend the current rules and/or to introduce new ones as of January 1, 2024.

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