Unemployment: three questions about the new compensation rules

Posted Nov 21, 2022 5:28 PM

After having created new rights for the self-employed and employees who resign to retrain and reformed the conditions of compensation for job seekers so that “no one can earn more from unemployment than by working”, the executive is going more far for the unemployment insurance scheme to “combine protection and an incentive to return to work”.

The idea is now that the rules of compensation are more modulated according to the economic situation. “When things are going well, we tighten the rules and, when things are going badly, we relax them”, explains the Minister of Labor, Olivier Dussopt. He unveiled this Monday morning, the new rules which will come into force from 1er next February. A new reform deemed “unacceptable” by all unions.

Explanations in three key questions:

1 – How is the compensation currently going?

To be compensated, an employee must be registered as a jobseeker, actively seek employment and fulfill certain conditions. Some job seekers are therefore not eligible for compensation. This is the case of those who have not worked enough to obtain rights.

To open rights, you must have worked 6 months in the last 24 months (36 months for those over 53). The minimum duration of compensation is six months. The maximum duration varies according to age: it is currently 24 months for those under 53, 30 months for those aged 53-54 and 36 months for those aged 55 or over. For the unemployed under 57 who have received a salary of more than 4,500 euros gross, a degressivity of 30% of the allowances applies from the seventh month.

2 – What will change?

Inspired by what is being done in Canada, the executive has decided to adjust the conditions of unemployment insurance according to the situation of the labor market, with the aim of having rules “more encouraging to the resumption of ‘use “. Its leitmotif is that unemployment insurance must be “stricter when too many jobs are unfilled, more generous when unemployment is high”.

Against a background of anger over purchasing power, the government ruled out from the outset to touch the level of compensation. Nor does it modify the conditions of access to unemployment insurance, namely the fact of having worked 6 months over a reference period of 24 months.

It is the duration of compensation that will change by decree. Job seekers whose employment contract ended after February 1, 2023 will have a reduced duration of 25%, with a minimum floor of six months. For example, an unemployed person who would have been entitled to 18 months of compensation under the current system will therefore only be entitled to 12 months.

The reform will not apply overseas. And certain populations are excluded: intermittent performers, beneficiaries of the professional security contract (intended for redundant workers), sea fishermen, dockers, expatriates.

The Minister of Labor hopes for “100,000 to 150,000 additional returns to work” in 2023 thanks to the reform.

3 – Which indicators to modulate?

To assess the state of the labor market, the government has decided to base itself on the unemployment rate published each quarter by Insee within the meaning of the ILO ( currently 7.3% ). The conditions for compensation will return to the level prior to the reform (more protective rules) if unemployment exceeds 9% (state of the so-called “red” labor market, which has not been the case since the third quarter of 2018) or increased by 0.8 points over a quarter, a “very sudden deterioration in employment”. Job seekers at the end of their rights will then be entitled “to an end of rights supplement” of 25%.

If, for three quarters in a row, the unemployment rate falls below 9% and does not increase by more than 0.8 points, the situation will return to “green” and the duration of compensation will therefore be reduced again by 25 %.

The 9% threshold was chosen because it is the average rate over the last 20 years.

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