France: Second stage of the government's employment plan

On 16 January 2006, French prime minister Dominique de Villepin gave a press conference at which he announced the second stage of his government's programme to boost employment, in particular the employment of young people. De Villepin also took the opportunity to sketch out the third stage of the plan and to give some preliminary details on how the government intends to boost the employment levels of older people.

The first stage of the government's "battle for employment" was launched in June 2005. Among other things, it introduced an employment contract for new recruits (contrat de travail - nouvelles embauches - CNE), to be used by very small companies with 20 employees or fewer, and which simplifies severance procedures for new workers during the first two years of their employment. Preliminary research into the effectiveness of these contracts, which have been in use since 4 August 2005 (see France: New employment measures), found that, of the 280,000 contracts that were concluded between September and December 2005, one-third came about directly as a result of the availability of the new contracts (see France: New contract creates employment).

According to De Villepin, the employment of young people is the priority of the second stage of this plan. Almost a quarter (23%) of young people are unemployed (618,000 altogether), compared with 9.6% of the population as a whole. Among young people without qualifications, the situation is almost twice as bad, with unemployment running at around 40%. Further, young people in France take twice as long as the European average to find stable employment - between eight and 11 years. Most work on a succession of fixed-term contracts, carry out temporary work or are carrying out unpaid work experience. However, even having good qualifications seems not to guarantee employment: 21% of young people who have completed their school-leaving certificate (baccalauréat) and four years of further study remain unemployed nine months after graduating.

Apart from highlighting the human toll of unemployment among young people, De Villepin also emphasised that getting young people into work is an urgent economic requirement: in 2006, the population will fall for the first time. Further, the so-called "baby-boomers" are retiring. Fast-growing areas such as health, personal and other services need workers, as do industry and construction. There are already labour shortages in some sectors and regions of France.

The second stage of the government's enlargement plan also incorporates an action plan for older people and measures to increase employment generally. Additionally, De Villepin took the opportunity of the press conference to announce the framework for the "third stage" of his battle for employment.

Measures aimed at young people

Training schemes combining work and study

De Villepin announced the government's initial targets for day-release training schemes to allow young people to combine work with study: 500,000 apprentices by 2009; and an annual tally of 200,000 so-called "professionalisation contracts" from 2007, which will allow young people to gain a recognised qualification through a mixture of teaching and work experience (see France: New measures to improve equality of opportunity). The prime minister noted that the introduction of day-release schemes is progressing well in small enterprises, but not in larger companies, despite the fact that they have better structures for offering a range of training schemes.

The government has therefore decided to set a quantitative target to improve this situation. From 1 January 2007, 1% of the workforce in companies of more than 250 employees should be young people on day-release training schemes, increasing to 2% from 1 January 2008 and 3% from 1 January 2009. To allow this goal to be reached, changes to the apprenticeship tax will be made.

Internships and unpaid work experience

The government is concerned that companies can "misuse" young people by obliging them to spend long periods as an intern or to carry out work experience (stages) without being paid. De Villepin expressed the government's wish that this type of occupation regain its educational character and provide young people with the means to find a proper job afterwards.

The government is therefore proposing a "work experience charter" (charte des stages), which will "define good practice and eradicate abuse". Additionally, De Villepin announced three concrete measures the government plans to introduce that will recognise the value of this type of work experience. These are:

An obligatory allowance (indemnité obligatoire): All young people carrying out work experience or interning for more than three months must be paid. Companies will be exempt from up to €360 of social insurance contributions a month for each internee to enable the company to cover this allowance.

• Academic recognition of work experience: All time spent in long-term work experience positions will be recognised as an element of a university degree.
• Recognition of service: All time spent on work experience will count towards the young person's service record. De Villepin has instructed the social partners to open negotiations at sectoral level on this issue soon.

First recruitment contract

This proposal, which was announced without any consultation with the social partners, has aroused the fury of organisations representing young people and union confederations. It concerns the proposed creation of a first-time recruitment contract (contrat première embauche - CPE) designed for young people under the age of 26.

Introducing the proposal, the prime minister explained that the government is particularly concerned at the plight of young people who have been unemployed for more than a year and seem unable to find a job. De Villepin noted that between mid-June and the end of September 2005, the national employment service, ANPE, conducted interviews with 57,000 young individuals in this situation. As part of the support being offered to all jobseekers, ANPE has begun to carry out individual monthly interviews.

Further, the prime minister announced that measures currently applying to young people without qualifications contained in young people's employment contracts (contrats jeunes en enterprise), such as the waiving of employers' social contributions, will be extended to cover all 240,000 young people who have been unemployed for more than six months. Enterprises recruiting any young people on open-ended contracts (contrats à durée indeterminée) during 2006 will be exempt from paying employer social contributions for three years.

De Villepin stressed the government's view of the importance of there being a contract that is suitable for young people and one that will facilitate their access to stable employment. He noted that it was unjust that employers always expected young people to have the sort of experience that they have not had a chance to acquire before offering them stable employment, which he said was both "ridiculous and unfair".

Therefore, he reasoned, the government wants to create a direct route of access to open-ended employment - the CPE). This would be available for companies with more than 20 employees to recruit young people under the age of 26. Smaller companies already have access to the employment contract for new recruits (CNE - see above). The idea is that the CPEs will allow young people to be recruited on an open-ended contract, which, he noted, is the case for only a minority of young people at the moment. As with the CNEs, the CPEs provide for a consolidation period of up to two years. During this time, they will be paid the same as other workers.

Work experience periods, time spent on fixed-term contracts and combining work and study carried out at the company will be included in the two-year consolidation period. Thus, a young person who has already had six months of work experience and worked for six months on a fixed-term contract (contrat à durée determinée - CDD) at the enterprise will have a further 12 months of the consolidation period before transferring to a proper open-ended contract. This timescale compares very well with the eight to 11 years young people usually require before finding stable employment.

By proposing this contract, the government also wanted to address three concerns:

• Enhanced compensation for dismissal: If these contracts are terminated after four months of work, each young person will be entitled to an allowance of €460 a month, paid by the state, in addition to normal severance pay. They will receive this for two months; the idea behind it is to allow them to find new employment under better circumstances than usual. Further, De Villepin is calling for this measure to be incorporated rapidly into the CNEs that have been concluded with young people employed in companies of 20 employees or fewer.
• Improved training entitlement: In future, the entitlement to individual training (droit individuel à la formation) will start to accrue from the end of the first month at work, which will allow young people to start off in life with some "training capital". In other contracts, this entitlement begins after one year.
• Better access to bank credit and accommodation: Credit offered by the Locapass system, which allows people to stagger payment of the deposit on rented accommodation (two months' rent), will automatically be offered to all people concluding a CPE. This measure will be implemented in cooperation with the social partners. Also, with regard to access to credit, the banks have indicated that they will consider CPEs and CNEs in the same light as a standard open-ended employment contract.

The government is including these measures in the draft law on equality of opportunity (see France: New measures to improve equality of opportunity), which was scheduled for debate in parliament in mid-February.

Measures to promote the employment of older people

France has one of the lowest participation rates of older people among developed countries. The prime minister's action plan to address this situation is based on the national multisector agreement concluded between the social partners on 13 October 2005 (see France: National accord on older workers) and signed by the employers' representatives and three of the five union confederations (CFDT, CFE-CGC, and CFTC).

Research shows that not employing older people does not automatically promote the employment of young people - on the contrary, it reduces labour market participation, increases the burden on the social security system and reduces recruitment opportunities.

The prime minister said of the plan: "It's not about saying that people have to work longer, but helping those who want to work longer or to pass smoothly from work into retirement." The details are being prepared by a working group and the plan will be officially launched at a national conference on the employment of older people in March, which the prime minister will chair.

Among other things, this plan of action will introduce a tailor-made fixed-term employment contract for people of 57 years or older as envisaged in the national social partner agreement.

The contract will be valid for 18 months, and may be renewed once. It is aimed, in particular, at people who are often excluded from the labour market because of a lack of a suitable employment contract and will help older people remain active in the labour market until they retire.

In addition, within the framework of preparatory work that has been carried out, the prime minister made some suggestions for how older people could carry on working, if they so wish:

• the sums lower-paid workers are permitted to earn from a combination of pay and pension (cumul emploi-retraite) could be increased, up to an amount deemed "acceptable". Currently, the combined pay and pension that people are entitled to may not exceed the amount they received in their former job;
• increase the pension premium for those who work beyond normal retirement age. He has instructed the pensions committee to compile a report on this urgently; and
• allow people to retire gradually. Under this suggestion, people over the age of 60 would be able to work part time and receive a partial pension.

Measures to increase participation in the labour market

As well as targeting older people, the government also wants to create more choice for all those who want to increase the amount of work they do. If they so wish, employees will be able to carry out temporary work (intérim) - providing they remain within the legal working time limits - even if they already have a part-time or full-time job. This will allow them to earn more and gain additional experience. Further, they will be able to improve their future employment opportunities, which is particularly relevant to those who would like to retrain.

The prime minister also wishes to open up new possibilities for work secondments. He noted that some employees are unable to develop their careers in their own companies and if they want new opportunities, they only have one choice - to resign. As De Villepin said, this is clearly a risky option, and not a decision to be taken lightly, especially in areas where employment levels are threatened by outsourcing or the relocation of production.

Therefore, De Villepin wants employees, with the consent of their employer, to be able to work in another company without having to change their original employment contracts. He has stipulated that this will have to be voluntary - people may not be forced to do it - and their pay and social rights will be guaranteed. Further, normal competition rules may not be breached. This scheme will, however, allow people to try out something new and develop new skills without risking their livelihoods.

Another idea suggested by the prime minister will directly help the 470,000 people who are currently receiving supplementary benefit (l'allocation spécifique de solidarité). This benefit is claimed by people whose entitlement to normal unemployment benefit has run out. The current situation is that only about half of these people (those who are registered as unemployed) have a right to regular interviews with a recruitment professional, and the others get no personal assistance at all.

De Villepin wants to extend the work carried out by the unemployment insurance fund ANPE to make sure that all those receiving supplementary benefit will have access to targeted careers advice.

Proposals for the third stage of the employment plan

De Villepin also took the opportunity of the press conference to outline the third stage of his employment plan. He identified three major topics:

• The reform of social protection funding: The prime minister will hold ministerial meetings to decide the strategy to follow up on suggestions made by President Chirac to introduce changes to the system of employers' social contributions in order to preserve the country's competitiveness, ensure secure funding for the social protection system in the long term, and boost employment. De Villepin has set up a working group to examine these issues.
• Further reform of employment contracts in France: While some envisage a single contract, others want to retain specific contracts for different situations. A further group of interested parties is calling for the new recruitment contracts to be available for use by all companies. The complete range of options is to be discussed by the social partners. Another area De Villepin identified is that of termination of contracts. He maintains that the current situation is unsatisfactory and that there are too many contentious areas. Termination by mutual agreement does not take place within a satisfactory legal framework, which, he says, "creates a culture of conflict and legal insecurity for everyone". He adds: "No one can win in this situation." He has therefore requested that the government and the social partners enter into a dialogue with the purpose of defining a new legal framework for severance by mutual agreement.
• Reducing social charges on overtime work: Here, De Villepin wants to achieve two things: allow employees to increase their purchasing power from working longer if they want to; and make the cost of overtime hours "economically acceptable, bearing in mind the need for companies to operate competitively but without jeopardising employees' pay". The prime minister has instructed the ministers concerned to commission a study on the subject.

National action plan to promote the employment of older people, 2006-10 On 13 October 2005, the social partners concluded a new national multisectoral agreement on the subject of employing older workers (see France: National accord on older workers). On 17 January 2006, the prime minister announced a five-year national action plan to promote the employment of older people. The following day the employment minister, Gérard Larcher, announced the release of €10 million to finance targeted measures. Larcher was addressing the second meeting of a working group established to debate the national action plan for older people, comprising social partner and ministerial representatives as well as members of parliament and representatives from the social and economic council; the inaugural meeting had been held on 16 December. The third meeting took place on 6 February and a national conference on the subject was scheduled for the beginning of March. It was to be chaired by the prime minister and was expected to launch the final plan. The action plan gives details of the government's financial commitment and sets out the tasks of the various national agencies. It focuses on four topics, as set out in the social partners' agreement: changing attitudes; keeping older people working; facilitating the return to the labour market for older people who have been made redundant; and better management of the end of people's working lives. Changing attitudes The government highlighted the need to eradicate prejudice against the employment of older people. Larcher referred particularly to a successful Finnish campaign from 1998 to 2002 which, he said, could provide a model for the French campaign. To be launched at the end of the spring, the campaign will disseminate existing information on good practice - this will be released on a dedicated website, which will provide information on managing the working lives of older employees. Keeping older people working The action plan draws on the involvement of many government agencies. On a regional level, it will mobilise employment and skills development measures (engagements de développement de l'emploi et des competences entre une branche professionnelle et l'Etat - Edec), as provided for by a decree published in the French official journal on 18 January 2006. While 18,000 older people currently benefit from Edec activities, Larcher envisages that this number will double by 2010, and the government has made a commitment to release an additional €3 million from 2006. At the same time, the government is encouraging the development of skills management accords (gestion prévisionnelle de l'emploi et de competences). Larcher has promised to examine the social and tax system relating to the financial aid provided within the framework of such agreements, with a view to extending it to companies that have between 250 and 500 employees, from the current limit of 250. With regard to working conditions, the government has suggested that the activities of the fund for the improvement of working conditions (fonds pour l'amélioration des conditions de travail) be refocused towards managing ageing, notably in small and medium-sized enterprises, and it has promised an additional €2 million in 2006 (equivalent to a doubling of its current funding). The extra money will be available for the duration of the plan. The government has pledged to ensure that the resources of the national agency for the improvement of working conditions (agence nationale pour l'amélioration des conditions de travail - Anact) will be better used. Currently, Anact devotes around 19% of its budget to managing the ageing process, but by 2008-10 this proportion should rise to 30%. Occupational health and safety is another key issue, and Larcher has called on the occupational health departments of the social security institutions to take a more active role. Regarding retirement, Larcher declared that from this year it will no longer be possible to conclude any new sectoral accords that allow retirement before the age of 65. Those 80 or so accords that are currently in force should be annulled, at least by the end of the action plan, which is 2010. Larcher also said that it was necessary to re-examine provisions that allow retirement before the age of 60. Facilitating a return to work The public employment services will be instructed to pay more attention to the needs of older jobseekers, and those working for the service will themselves be given special training. Larcher commented that, although around 60% of jobseekers overall find new employment during the first 12 months of unemployment, the success rate for jobseekers over the age of 50 runs at only around 33%. The government wants to see this gap halved by the end of the plan. The agency that organises vocational training for adults (AFPA) will concentrate more effort on the provision of training programmes for people over the age of 45; 9,600 training courses will be established in 2006. Additionally, the programme for validating previous professional experience (VAE) will be extended, rising from 1,500 VAE activities in 2005 to 7,000 by 2007. The anti-discrimination charter that was signed by temporary recruitment agencies SPE and ETT will be signed by all recruitment agencies. This section of the plan seeks to increase the use of assisted contracts in the commercial sector (principally through the employment initiative contract (contrat initiative emploi), which is a special contract targeting long-term unemployed, younger and older unemployed people and people receiving the minimum state assistance). Of the 50,000 contracts anticipated for 2006, 20,000 should be targeted at older workers. Finally, the government will progressively eradicate the Delalande contribution, which employers must pay when older workers are dismissed. It will be fully removed by 2010. Better management of career-end On 31 October 2005 , the government took a step towards better management of career-end by issuing a series of decrees permitting people working part time to pay into pension funds on the basis of full-time, rather than part-time, working hours. Additionally, sums earned through mentoring activities carried out in their former companies by retirees will not count towards accumulated pension and earnings limits. On the issue of transferring the rights acquired within time saving accounts (compte épargne temps), the government is likely to consider two options: either regulating transfers by collective agreement; or allowing this to be managed by a third party. The government is also looking at tools that will allow people to work beyond the age of 60 if they want. These include partial retirement: this option is currently used by fewer than 1,000 people and the government is planning to make it easier for people to combine part-time work with drawing their pension. The rules governing working while in retirement (cumul emploi-retraite) were relaxed by legislation dating from 2003 and the government intends to relax them further, notably for people on low pay. Additionally, the pension bonus paid to people who work beyond retirement age will be increased. The employment minister said that the government aims to increase the participation of 55- to 64-year-olds by two percentage points a year for the duration of the plan, to achieve a 50% employment rate by 2010.

Protest at the proposed new contracts The proposal to launch specific employment contracts for young people - contrat première embauche (CPE) - was announced by the prime minister with no prior consultation with the social partners or student organisations, and it has provoked a fiercely critical reaction from both student and union organisations. The two main student organisations (UNEF and UNL) immediately called on the unions to support them in a demonstration to take place while the measure was being debated in parliament. In the event, on 7 February, between 200,000 and 500,000 people took to the streets across France. Subsequently, UNEF and UNL and the six union confederations CFDT, CGT, CGT-FO, CFTC, FSU and UNSA issued a joint declaration, calling the proposed new contracts "discriminatory". Another demonstration has been called for 7 March. The proposal reignited a battle that took place more than 10 years ago in 1994, when the then prime minister Edouard Balladur attempted to launch the so-called "smic jeunes" (a lower-rate national minimum wage (smic) for young people) which was branded an insult to young people. In the end, that idea was abandoned, and parliament had to abolish the relevant legislative provision; the organisations criticising the CPEs are hopeful that their campaign will also achieve a withdrawal of the idea. For its part, employers' federation Medef has called for the CNE new recruits' contract to be extended to all companies, and not just to be available for those with 20 employees or fewer. In its opinion, this would be better than creating a contract specifically designed for young people.