Hiring subsidies: efficiency trompe the eye – Le Figaro

Aid for hiring for SMEs, launched in January, could create 60,000 jobs by the end of 2016, according to a Treasury note released Monday. If it is effective in the short term, the device does not guarantee the creation of sustainable jobs and will cost 2 billion euros over 3 years to public finances.

Francois Hollande says he has “no luck” on unemployment … it is however not for lack of having used all the tricks to try to reverse the unemployment curve, provided that has set for itself to represent the vote of the French.

The premium “Employing SMEs”, launched in January, is emblematic in this respect. Since January, companies with fewer than 250 employees that hire both permanent and fixed-term contracts of more than six months an employee paid 1.3 times the minimum wage are eligible for aid of 4,000 euros over two years. Crowing! Eight months after its launch, more than 580,000 applications for aid have been registered with the Agency and payment services (ASP) that manages the device.

In the first quarter, hiring in more than six months CDD are up 12.4% for the eligible companies against an increase of 7.2% for non-eligible companies. The impact is less but for real contracts into permanent contracts: + 3.8% for eligible businesses against 2.2% for those who did not. This premium “SMEs hiring” should allow “extra order the hiring of 110,000 spread over the year 2016″, assesses the general management of the Treasury, which depends Bercy. But “given the purpose of the contract that will take place during the year (end of CDD, CDI breaks), the final contribution to job creation is significant, estimated 60,000 additional jobs by year end,” continues -it, in a note published Monday. And yet, this estimate is below the reality because it ignores the extension announced in June of the device to the year 2017.

The premium being temporary the impact on employment levels would vanish in about five years

Efficient short term, the measure allows to obtain quick results … but that could well be an optical illusion. And for two reasons. First, it does not create jobs in a sustainable manner. “A temporary hiring bonus may allow faster job creation that lower social contributions” observes Treasury note. But “eventually, the premium being temporary, the impact on employment levels would cancel horizon (of) five years,” she anticipates. So this is a patch, not a structural reform component of the cost of labor, which remains a major handicaps of the French market.

Second, the device cost to public finances is estimated at around € 2 billion spread over the years 2016 to 2018, says the Treasury. However, without denying the impact of these premiums on short-term employment, economists believe that they “may increase the long-term unemployment rate, because of the cost to public finances of a device that would not create jobs in a sustainable manner, “says the Treasury.