Monday, February 22, 2016

Is the unemployment insurance too generous in France? –

Is the unemployment insurance too generous?

We can not clearly say that. Total revenues for French unemployed are in the average of OECD countries. In terms of compensation: the period extending up to 24 months (36 months for over 50 years) for the wage replacement rate raw which varies between 57% and 75 % depending on the situations (62% to 95% net) . But we must keep in mind that almost 60% of the unemployed do not receive this duration potentiell e, 30 % of job seekers have same potential duration of less than 12 months compensation.

revanch e, has I nsurance French unemployment is among the most expensive in the world in terms of the rate of fee applied to employees and to companies: one month’s net salary per year ! These resources enable Unédic of surpluses on the compensation activity. Finally, it is noteworthy and France the unemployed get little state and Revenue replacement mainly from Unédic: “generosity “assumed insurance only highlight the lack of public financial solidarity with the unemployed.

what is the origin of the debt Unédic which will culminate at the end of 2016 to 35 billion euro s

students accounts we can conclude immediately that the generosity of the rights for the unemployed is not the cause of the deficit and therefore the debt. The common law system – which covers 95% of French employees affiliated Unédic – is even a surplus of 58.6 billion over the period 1995-2015. Conversely, special diets intermittent and temporary businesses contributed significantly to losses in this period: -19.3 billion for the first and for the second -22,000,000,000

In parallel. is understood that the State has stopped its funding for unemployment insurance since 1984. it is in fact exclusively social contributions of employees and private sector employers who carry the system. In addition, when Unédic generated surpluses – particularly following the tariff reductions of the unemployed in 1993, when the degression was introduced by the Socialist government of the time – the state has allocated new sources of spending in this joint body. This is particularly true of the funding of public service employment. Each year Unédic involved in two thirds Pole budget by allocating 10% of its resources. This represents about 3.3 billion per year. We can ask the following question: Is unemployment insurance fund this public policy

Is it a problem that the public sector does not contribute to unemployment insurance?

Only 70% of french employees are affiliated to UNEDIC. The French system practice adverse selection, that is to say, public employers are not obliged to affiliate their employees to UNEDIC, which exempts from the levy . L ‘self-insurance is the default rule: If a public employer separates an employee, it is he who must pay him his unemployment benefits directly to the conditions provided by the insurance agreement unemployment. In the end, making insurance compulsory for all French employees would provide an invaluable gain for national solidarity and contribute to the overall well-being. This also significantly broaden the base Unédic, to a lower rate of contributions and the dealer labor cost 2% . Ironically today is the opposite password: the account of the Court notes that indeed important public employers (public hospitals, job center, Waterways of France, etc.) are withdrawing from this device what solidarity unemployment insurance.

What to public enterprises?

In terms of public enterprises, the number of 1444 and employing 801,270 employees late 2013, overall it is not known how many have joined the unemployment insurance. We have precise figures on the branch of industries and gas (IEG), where public and private enterprises have a specific agreement that provides affiliate. This is a shortfall of 300 million euros in contributions per year.

You say the intermittent regime falls partly a cultural policy?

The latest unemployment agreement attempted to modify the rights of intermittent to master the costs of that system. Without success because in the end, they have only little changed . The main features are always the same: 50% are intermittent compensation and unemployment insurance continuously is about 50% of annual compensation intermittent resources. What we see is that the gap between the special scheme and the common law has widened in recent years to the benefit of intermittent and their employers. It’s a difficult equation today. However, we can say that the intermittent regime that grants them additional rights is more a cultural policy of the state and not of Unédic.

Must implement degression of unemployment benefits to reduce debt and promote the return to employment?

In the 90s the social partners had introduced degression of allowances unemployment. The experiment was stopped in 2001. The only study that was carried out this experiment is that of Insee, published in 2004. It concludes that over the period 1993-1996, the device does not permit a return more rapid employment unemployed. Worse, it even hindered the recovery of a job. There is no similar assessment of gradual decrease in any other country, and economic theory does not favor such a profile.

Furthermore, in the current environment with an unemployment rate over 10%, reduce the rights of the unemployed would not allow the deficit Unédic (4.4 billion euros in 2015 ) . P ar example, if we gave five years to bring the debt to zero, it would pass the costs of compensation of about 30 billion to 23 billion per year by 2016, a 21% savings on the fees paid to the unemployed which would require halve their potential rights. In the end, the cost would be huge for jobseekers assigned , especially in low-growth period and a high unemployment rate. Like all parametric reform, the gradual decrease would be both inappropriate solve problems and UNEDIC deficit.

What are the possible adverse effects of tapering?

The nearest unemployed labor market will accept unskilled jobs, which further reduces the chances of further from the use of rehabilitation. In this scheme, there will be no more jobs available in the short term and the number of unemployed will find themselves under-employed, resulting in a relatively low wages and productivity, reducing potential growth.


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