Unemployment insurance. “It is not surprising that the government took a step back from the reform”

25% reduction in benefits for all new jobseekers from February 1: The government struck a blow on Monday by introducing a new unemployment insurance reform deemed “unacceptable” by all unions.

Labor Minister Olivier Dussopt hopes to “return between 100,000 and 150,000 additional jobs” in 2023 thanks to this reform. “We will maintain one of the most generous systems in Europe,” he said.

Gilles Saint-Paul, professor of economics at ENS Ulm, discusses the consequences of this reform. Care.

Does reducing the compensation period really help return to work when the economy is favorable?

“In principle, this encourages workers to look for work more intensively and therefore lowers the average unemployment rate. In the 1970s, there was an increase in unemployment that we were not used to, and we introduced more generous unemployment insurance benefits than in the past. This led to perverse effects, increasing unemployment, from which we never recovered. So the idea of ​​doing the maneuver slightly in the opposite direction is a good idea.

Then, are the current circumstances conducive to applying this logic? I’m less sure. With sanctions against Russia, we are creating a recession in Europe. Within six months, it would not be surprising if the government were to withdraw these measures, as they did earlier during the recession caused by anti-Covid measures. In summary, there is an argument in principle that is valid, but perhaps the timing is not right. »

Will this measure solve the recruitment challenges in the strained sectors as the government claims?

“I really don’t think so. This will increase the incentive to look for work in all sectors, but I do not think that it particularly favors the stressed sectors. First, because there is not much intersectoral labor mobility. In sectors that are difficult to recruit, such as catering, it is more about long-term, training and professional orientation.

The generosity of unemployment insurance increases the stress on the economy as a whole, but it is not what creates differences between stressed sectors and others. Stressed sectors are sectors where demand is particularly strong relative to supply (of labor). So one has to ask why there is so little supply. Salary terms are often unattractive. This raises the question of why employers don’t increase them. »

What would be the long-term consequences of reducing the compensation period?

“This should reduce the great black spot of the French labor market, which is the duration of unemployment. Historically, Anglo-Saxon countries like Canada or the US have been less generous with unemployment insurance, but the duration of unemployment is much lower, which means that the labor market works better, finding jobs faster. »

“I would be surprised if we reach full employment within two years. »

Could this prompt unemployed workers to accept increasingly precarious contracts?

“Even in the current situation, many jobs that come after a period of unemployment are short-term jobs. I do not think that this reform will affect the structure of jobs between CDD and CDI. An unemployed person who is offered CDD will accept it either after a year or after six months. »

This new reform is part of the government’s strategy to achieve full employment by 2027. Do you think this goal can be achieved?

“If we mean full employment as an unemployment rate of about 5%, that is not realistic at all. In principle, in the long term and with thoughtful reforms, yes, it is possible to reach 5%. But all of this comes at a bad time, as is the recession caused by energy constraints and the war in Ukraine. I would be surprised if we reach full employment within two years. »

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