“Tightening unemployment insurance rules does not create jobs,” says economist Bruno Coquet

While the government wants to change the rules of unemployment insurance, in particular to encourage the return to employment, for the economist Bruno Coquet, “we cannot demonstrate that there is a problem of returning to work. ’employment on the unemployed receiving benefits’.

Unemployment insurance is in the government’s sights. A government seminar devoted to work is organized on Wednesday March 27 in Matignon. The Prime Minister, Gabriel Attal, will then speak in the evening on the 8 p.m. news on TF1.

“If unemployment insurance is generous, for example, if it covers risky jobs well, people are more willing to accept risky jobs”declared Tuesday on franceinfo the economist Bruno Coquet, specialist in labor market policies.

franceinfo: Have you heard the little music that has come up regularly and insistently lately: toughening unemployment insurance rules promotes a return to employment? What do you think ?

Bruno Coquet: First, toughening unemployment insurance rules does not create jobs. So we can already say that. Then, unemployment insurance in the public debate is always too much. In economic literature, this is not too much, it is an optimum. Too much is not good because it actually slows down the return to work, but not enough is not good either because it forces people to return to work very quickly. And the first to come, in a way. It makes them lose their human capital, to put things very briefly. And so, will this encourage a return to work? What is certain is that it will reduce unemployment insurance costs for people who are reaching the end of their rights. Afterwards, that does not mean that at the end of their rights, they will have found a job, especially in the current situation.

The economist Gilbert This writes today in the columns of South West that toughening unemployment insurance rules is part of the solution. “France has very, very advantageous rules when compared to other OECD countries”he writes.

For the moment, we cannot demonstrate that there is a problem of returning to work for unemployed people receiving benefits. There is no evidence to show this today, especially since the reforms that have been made in the last five years.

Knowing that less than one in two unemployed people receives compensation.

Yes.

“We must always ask ourselves why the unemployed without compensation do not return to work. It is not because they are overcompensated.”

Bruno Coquet

on franceinfo

The second thing is that unemployment insurance in France is very expensive, it is twice as expensive as in the second most expensive country in the OECD. That’s almost one month’s net salary per year.

Bruno Le Maire, the Minister of the Economy, recommends reducing the duration of compensation for seniors from 27 to 18 months, as for other job seekers.

As for other job seekers, he cannot demonstrate that today there is a problem of seniors who do not return to work because they would receive too much unemployment insurance compensation. We cannot demonstrate that.

It does not encourage a return to employment, nor does it increase the activity rate. The problem for seniors is their activity rate which is very low compared to other European countries.

It doesn’t increase it, we can even say that it decreases it. In the economic literature, you have a lot of evidence which shows that if unemployment insurance is generous, for example, if it covers risky jobs, fixed-term contracts, etc., people are more willing to accept risky jobs and therefore in innovative companies which create short contracts, etc. And we can have effects in the other direction. The literature shows this very well.

“We cannot show that at the moment in the French system, there is a moral hazard for seniors.”

Bruno Coquet

on franceinfo

Especially since we must keep in mind that this rule of extending the rights of seniors until they retire at full rate is often invoked. But also, Unédic automatically retires seniors. That is to say, if you acquire 27 months of rights one month away from having full retirement rights, what happens after one month? Unédic automatically retires you, meaning you do not have these rights. And that is a very important point to understand.

According to INSEE figures published this morning, the deficit for 2023 reaches 5.5% of GDP. “We will continue on the path of rigor and responsibility, always with a common thread, that of work”Gabriel Attal said earlier before the National Assembly, and he cited the unemployment insurance reform.

We don’t see how that makes more work. And regarding the idea that work should pay more than inactivity, for me, I think everyone agrees on that.

“But with all the reforms that have been made, it’s not that work pays more, it’s that inactivity pays less.”

Brunot Coquet

on franceinfo

However, we have a problem being able to live on our salary, even when we are on full salary. And governments, for a long time, have been giving salary supplements with activity bonuses, more recently checks, to people who work full time. So that’s the real problem: reducing social insurance. Because these are indeed insurance, and not aid – which do not bring more jobs and do not pay more for work.

The government wants to regain control of the management of Unédic. What do you think ?

For me, he has done worse than the social partners so far. The management of the social partners was certainly open to criticism. So far, the State is just taking from the fund, to make it very short. And so, he takes into the social insurance fund. He might want to reduce rights to encourage the unemployed to return to work quickly, but he should lower contributions. That’s good management. There, at a time when things were going rather well, what he did was take the surplus. Surpluses that are needed in an insurance of this type to cope with the deficits which are sure to occur if unemployment has increased.