The planned reform was an effort to promote employment and cut the budget deficit. The primary changes that were being proposed are the following:
- Jobseekers will need to have worked for a minimum of eight months in the last 20 months in order to be entitled to unemployment benefits. (The current requirement is six months’ employment out of 24 months).
- The compensation period will be reduced from 18 to 15 months.
- A ‘senior employment bonus’ scheme will apply to unemployed senior citizens (in the final version of the reform, this will probably be those aged 57 and over). Under this scheme, the government will supplement the person’s salary if they accept a lower- paid position than the one they held before losing their job. This means they can retain the same level of income they had before becoming unemployed. The supplement will last for up to a year.
- A indefinite-term ‘seniors’ contract will be created, which should make it easier to terminate the employment contract when the employee is eligible for a full pension.
- The ‘bonus-malus’ system for unemployment contributions is to be extended to new business sectors. This scheme is designed to encourage employers to reduce their use of short-term contracts and to promote stable employment. Currently it applies in seven industries and provides that employers with a high ‘separation’ rate (i.e. those that terminate a large number of employment contracts during the year) pay higher unemployment contributions, while those with a lower rate benefit from lower contributions.
It remains to be seen whether these proposals will be implemented, but it will be important for all employers to keep the situation under review, as the political landscape is changing rapidly in France.
