Unemployment insurance: the government wants to save 2 to 2.5 billion euros per year

The government has sent the social partners the "framework letter" on unemployment insurance, a roadmap setting out the framework for negotiating a new reform, with the objective of achieving "2 to 2.5 billion euros" in savings per year from 2026 to 2029, according to the document consulted by AFP on Saturday, August 9.

If they agree to open negotiations on unemployment insurance, employers and unions are invited to reach an agreement by November 15 and to generate between "2 billion euros and 2.5 billion euros" in savings per year on average over the next four years, "with a gradual increase" to reach "at least 4 billion euros in savings at cruising speed from 2030" , according to this document.

In order to "encourage a rapid return to employment" , the framework document adds that it will be necessary to "modify the minimum duration of employment and the reference period necessary to open a right to unemployment which determines the maximum duration of compensation" .

Currently, an employee must have worked at least six months out of the last 24 months to be eligible for unemployment benefit, which is paid for a maximum of eighteen months. Considering this system to be too unincentive, the government wants to bring it closer to Germany, where employees must work 12 months out of the last 30 and receive benefits for a maximum of one year.

"The financial situation of the unemployment insurance system and the need for more people to work make it necessary to change the rules of unemployment insurance," wrote Prime Minister François Bayrou in his letter to the social partners accompanying the framework document.

France is "one of the countries in the European Union where compensation conditions are among the most favorable and has a maximum duration of compensation higher than the European average," assures the Prime Minister.

Arguing that "we must work more" , François Bayrou had hoped on July 15 that the social partners would open such negotiations on unemployment insurance to participate in the budgetary effort, which aims to save 43.8 billion euros in the 2026 budget.

This is all the more compelling given that despite weak growth, the unemployment rate in France remained stable at 7.5% in the second quarter, INSEE reported on Friday, August 8. Unemployment in the labor force thus remains "slightly higher" than the 7.1% at the end of 2022, beginning of 2023, its lowest point since 1982, and three points lower than its peak in mid-2015.

This indicator today shows "a form of resilience in the labor market," with in particular an employment rate that continues to increase, driven in particular by the increase in the retirement age, notes Mathieu Plane, deputy director of the OFCE's Analysis and Forecasting department.

With the same objective of accelerating the return to the job market, the document specifies that it will be necessary to "strengthen incentives" for people who have concluded a mutual termination agreement and to "examine the opportunity to adapt" incentives for returning to work according to the level of remuneration and the amount of the allowance. The head of government adds that it will also be necessary to "intensify the effort made to help seniors return to work."

"This is a totally unacceptable act of destruction," CGT representative Denis Gravouil told AFP. The union representative denounced "a brutal cost-cutting plan" that will affect "those in the most precarious situations, by extending the working hours required to qualify for unemployment benefits," but also "those on permanent contracts who have lost their jobs due to the announced reduction in the duration of compensation." "We will do everything we can to derail this project if this government stays in power," the union official warned.

When this new tightening of the unemployment insurance system was announced, the CFDT's leader, Marylise Léon, also described these budgetary options as "total carnage for job seekers" .

This new reform comes as the social partners reached an agreement in November 2024, with new rules for four years, most of which will come into effect on April 1 of this year. Ahead of an inter-union meeting on September 1 to consider the follow-up to the Prime Minister's announcements, FO has already called for "mobilization and strike action" and filed a notice from September 1 to November 30.

The unions have also collectively launched a petition to say "no to the Bayrou budget" , signed by more than 300,000 people, and a platform to "decode" the announced measures, which on unemployment insurance denounces a "new drastic reduction" in rights.

It remains to be seen whether these negotiations will succeed, or even take place. Otherwise, the government will take control and impose its rules.

In June 2024, a reform introduced by former Prime Minister Gabriel Attal, rejected by the unions, also planned to tighten access conditions and compensation rules. However, it was suspended due to the dissolution of the National Assembly.