France: Third stage of government's employment plan launched

The French government has recently launched the third stage of its employment plan, along with a reform of social dialogue structures and processes. The plan contains a range of measures, including those designed to boost purchasing power, encourage job creation and help young people find work.

The first and second stages of the government's plan were announced in June 2005 (EIRR 378 p.6) and January 2006 (EIRR 386 p.20). The third stage was launched on 31 August 2006, at a government seminar chaired by the prime minister, Dominique de Villepin. In his address to the seminar, de Villepin stressed that the French economy had shown "encouraging signs" during the last quarter, with 2% growth and 310,000 fewer unemployed people than in June 2005 - prompting the unemployment rate to fall to below 9%.

The employment minister, Jean-Louis Borloo, unveiled a range of initiatives designed to boost employment "among those farthest from it" - such as young people with no qualifications and the long-term unemployed - as well as measures designed to help small companies with fewer than 20 employees. He also announced a wide-ranging reform of social dialogue, based on the recommendations of a study on modernising social partnership that Dominique-Jean Chertier, former adviser to ex-prime minister Jean-Pierre Raffarin, submitted to the government earlier this year (France: Renewing social dialogue).

Improving purchasing power

In the first place, the government believes that boosting purchasing power will help combat unemployment.

Employment "bonus"

The employment minister announced an increase in the one-off bonus paid when an unemployed person finds a job (prime pour l'emploi, PPE) to €940 in 2007 for someone working full time and earning the national minimum wage (smic). This is roughly the equivalent of a 13th month of pay for someone earning this amount. At the same time, the government plans to launch a debate on increases in the minimum wage and the upward drift in certain types of pay.

Paid in the form of a tax credit, the PPE benefits around 9.1 million households. Its value was raised from €538 in 2005 to €714 in 2006. The 2007 rise will increase the cost for the government by €500 million a year.

The government hopes that this measure will provide additional support for those on low incomes and so encourage people to work rather than claim the minimum social allowance (revenu minimum d'insertion, RMI). Contained in the draft 2007 Budget, the new rate will come into force on 1 January 2007.

Transport voucher

Petrol prices have risen by around 20 cents a litre since January 2005 and workers regularly complain about the increasing cost of transport to and from work. The government has therefore decided to introduce a transport voucher scheme (chèque transport).

To be included in a draft law on employee participation (France: Draft law on profit-sharing), the details of the scheme are being worked out in discussions with the social partners. The parties are aiming for a "simple, effective and environmentally friendly" system and it is expected that it will work in a similar way to a restaurant voucher (chèque restaurant) scheme already in existence. Payments made by the employer will attract tax and social security exemptions up to a maximum of 50% of the amount spent on public transport, or €100 a year for petrol. The state itself plans to set an example in the autumn by discussing arrangements for covering half civil servants' public transport costs from the beginning of 2007.

The transport voucher is expected to come into force in January 2007; the ensuing cost to the social security budget will be covered by the government.

Work dividend

The government is keen to encourage employee involvement in their companies, and the draft law on employee participation envisages a "work dividend", to take the form of the distribution of free shares. The government hopes this will provide more motivation for employees. It plans to publish the Bill before the end of 2006, so that employees will benefit from the financial results for 2005,

Employment measures

At the seminar, Borloo also announced a range of measures designed to boost employment, with particular emphasis on helping those currently having most problems finding work. These include young people without qualifications, young graduates from designated disadvantaged areas (zones urbaines sensibles, ZUSs) and long-term unemployed people. The government is also expanding support for businesses started up by jobseekers and very small firms with fewer than 20 employees.

Support for business

Employment ministry data show that roughly one-third of businesses are set up by unemployed people, and the government is keen to encourage this. Additionally, the ministry has calculated that, if it were to abolish current targeted reductions in employers' social security contributions, some 800,000 jobs could be lost. On the other hand, by using lower employers' contributions as a lever and also offering easier access to grants and subsidies, the government hopes that unemployed people setting up their own companies will in turn provide employment opportunities for those without work. It plans to simplify the procedures for people trying to set up their own company to obtain subsidies and grants, for example by making all the advice they need on the various grants and subsidies available from a single source.

Most of the employers' social contributions applicable to minimum wage earners at companies with fewer than 20 employees will be abolished on 1 July 2007, while the other measures to assist new entrepreneurs will be implemented at the beginning of January 2007.

The measures are contained in the draft social security legislation.

Recruitment preparation initiatives

Another area the government wishes to address is the mismatch between vacant jobs and jobseekers' skills. Under a new "recruitment preparation" scheme, jobseekers will receive training for a vacant post at a company over a three-month period, during which they will receive a trainee's allowance from the government and have access to the advice of a tutor or mentor in the company. After this time, the companies concerned will be expected to hire the jobseeker on a more permanent basis.

Targeting young people who are participating in Civis social integration schemes (France: Decree on revised youth employment measures), this initiative will be launched during the final quarter of 2006. By the end of 2007, the government expects it to have helped 50,000 people find jobs.

Young people living in disadvantaged areas

Young people from ZUSs suffer from unemployment levels that are twice the national average and have great difficulty finding employment, often because they are discriminated against because of where they live. The government is therefore planning to reallocate resources to concentrate on these areas.

In future, local prefects' offices will set up "employment solidarity groups" (groupes solidarité emploi), which will focus on helping those with few qualifications and preventing address-related discrimination. As well as providing career advice for those who have never had any before and creating new training opportunities, they will provide an outplacement service for young graduates who are participating in a Civis scheme.

In all, it is hoped that some 20,000 extra training places will be created. Additionally, subsidies of €1,000 will be available for new Pacte contracts (Parcours d'accès aux carrières de la fonction publique territoriale, de la fonction publique hospitalière et de la fonction publique de l'État), providing access to public sector employment for young people with few qualifications. Finally, young people living in these areas will have access to mentoring by recently retired people who are maintaining contact with their former companies.

The first employment solidarity groups will be set up at the 100 urban tax-free zones (zones franches urbaines, ZFUs) (EIRR 390 p.8) by the end of 2006. Schemes at the 750 ZUSs will be implemented during 2007.

The government does not envisage that these schemes will require new measures, as it plans to invest more resources and channel financial assistance via the national employment agency (Agence nationale pour l'emploi, Anpe).

Long-term unemployed people

By the end of 2006, a new "social cohesion bonus" (prime de cohésion sociale) will be paid to employers hiring people over the age of 50, who are categorised as "very long-term unemployed" and have been receiving social assistance for more than two years. The types of social assistance covered include the minimum social allowance (RMI); the lone parent allowance (l'allocation de parent isolé, API); and supplementary benefit (l'allocation de solidarité spécifique, ASS).

The new arrangements will be covered under the terms of an expanded "future-building contract" (contrat d'avenir). The first payments are expected by the end of 2006. In total, it is likely they will apply to around 50,000 people.

School-to-work transition

Finally, the employment minister announced the introduction of a "public guidance service" (service public d'orientation), which will help young people make the transition from education to employment. The new service will provide improved career guidance for young people, from the last year of secondary education to the third year of university degrees.

The government will appoint a special delegation, jointly chaired by representatives from the education and employment ministries and the former director of one of the Paris universities. It will have the task of setting up a national guidance scheme, which should be implemented during the 2006/07 academic year.

Social dialogue

Social dialogue has been a government priority since 12 December 2005, when the prime minister commissioned two major reports dealing with aspects of social partnership. These were submitted to him in April and May 2006 (France: Renewing social dialogue) and, in July, a working group comprising government and social partner members met to discuss how to implement the reports' recommendations.

Based on the recommendations contained in Chertier's report on modernising social dialogue, the government has identified three areas of focus for reform:

Reactions

The announcement that attracted most reaction from the social partners concerned the reduction of social contributions for small businesses. This was welcomed as a positive development by Laurence Parisot, the president of the Medef employers' confederation, while Cgpme, representing small and medium-sized enterprises, gave this measure its "unreserved approval".

The trade unions, however, were highly critical, claiming that the initiative will keep pay low. The CFE-CGC confederation, representing white-collar workers, called it a "new step towards a low-pay trap". Its national secretary Michel Lamy, maintained that small enterprises will be tempted to recruit employees on minimum pay and then keep them on it.

The FO confederation claimed that it would not boost employment but merely exacerbate the problems of those on the lowest levels of pay while reducing social security income, and it criticised the government's lack of consultation before announcing the measures. The CFDT called the reduction in social charges "questionable" in the current economic climate. At the same time, however, it welcomed the initiatives designed to encourage employee involvement in their companies as well as those targeted at helping the most disadvantaged.

On the proposed transport cheque, Medef claimed that it would be a further tax on business, while the union confederations criticised the government for not having discussed the measure before announcing it.