how the government of Gabriel Attal justifies this new reform

The Prime Minister and the Minister of Labor assure that this reform aims to fight against “mass unemployment”. However, the executive also sees it as a way to cut state spending.

Gabriel Attal said this during an interview in the 8 p.m. news on TF1, Wednesday March 27. He wants to change the unemployment insurance rules again. The Prime Minister is particularly considering a reduction in the duration of compensation for the unemployed “several months”but which would not pass “less than 12 months”. While a previous reform, which came into force in February 2023, has already reduced the duration of compensation from 24 to 18 months, the idea arouses strong criticism from oppositions and unions.

Questioned Thursday on franceinfo, the Minister of Labor, Catherine Vautrin, ensures that this new reform aims to fight against “mass unemployment”. “The longer you stay unemployed, the less likely you are to find a job.”she puts forward to defend a reduction in the duration of compensation. “We are doing to bring people back to employment”insists the minister.

Gabriel Attal put forward the same argument on Tuesday, during a speech in the National Assembly on Tuesday. For the head of government, this reform aims to “encourage activity” and get out of “all-allocation software”, which according to him La France insoumise and the National Rally defend. This new reform aims to achieve “full employment”, that is to say an unemployment rate of around 5%. It was 7.5% at the end of 2023.

Billions of euros in savings in the balance

The Prime Minister also argues for accounting logic. “If we had the same employment rate as our German neighbors, we would have much fewer problems with our public finances, because we would have greater tax and social revenues.he affirmed in front of the deputies.

The public deficit has in fact slipped, to 5.5% of gross domestic product (GDP) in 2023, according to INSEE, much more than the 4.9% initially planned by the government. This difference of 0.6 points of GDP represents nearly 20 billion in revenue to be found or expenditure to be cut in the state budget. Gabriel Attal maintained on Wednesday “the objective of falling below 3% deficit in 2027”. The executive also seeks to send signals to the rating agencies, which could downgrade France’s rating. Moody’s judges the rest “unlikely” the budgetary trajectory targeted by France. The government, which has ruled out increasing taxes, is therefore looking for savings. Cuts worth ten billion euros had already been made in mid-February on the 2024 budget. At the beginning of March, the Minister of Public Accounts, Thomas Cazenave, stressed that it would be necessary to find “at least 20 billion” for 2025.

Several avenues are being considered. Cutting unemployment insurance, with a budget of 45 billion euros per year, could allow the government to make several billion savings.

Unédic’s budget in surplus, but less than expected

On the financial side, another argument is put forward. “If we see that the financial trajectory of unemployment insurance and Unédic is deviating, we will relaunch a reform on the subject”warned Gabriel Attalyears an interview with Parisian on February 10. However, a few weeks later, the organization, led by unions and employers, finally revised its forecasts downwards. While Unédic expected to generate a surplus of 4.4 billion euros in 2023, this ultimately amounted to 1.5 billion euros.

These less good than expected results can be explained by a general slowdown in the economy, with growth revised downwards, but also by the transformation of Pôle emploi into France Travail, a development decided by the government. According to Unédic, the government took 2 billion euros in 2023 from its surplus and should take a total of 12 billion euros between 2023 and 2027 to finance the reform. Despite this hole in its budget, the association should still remain in surplus until 2025 and should be able to reduce its debt – from 58 billion euros in 2024 to 38.6 billion in 2027, according to its forecasts. “Without the levies made by the State, the financial debt would have been 25.5 billion at the end of 2027.affirms Unédic.

The Prime Minister now expects the social partners to open new discussions around the three avenues he has outlined: reducing the duration of compensation, increasing the duration of affiliation and modifying the level of compensation. Gabriel Attal wishes that “the settings” of this reform are defined “in the summer” with a view to entry into force “by fall”. Catherine Vautrin clarified Thursday that the announcements by the head of government constituted “a negotiating position”.