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Unemployment insurance: nothing justifies the forced passage

Last episode of a soap opera that has been going on since 2018, the government is preparing to implement the 1er October a reform of unemployment insurance suspended, in summary proceedings, barely three months ago by the Council of State.

According to the Minister of Labour, the decision of the supreme administrative court would only be justified by uncertainty about the economic situation. Claiming a very significant improvement in the economic situation, the government seems to consider that there are no longer any obstacles to the application of its reform.

It is, firstly, to interpret the decision of the Council of State in a reductive way, to say the least. It means, secondly, going a bit too quickly in a context that remains very fragile and uncertain.

“A manifest error of assessment”

First point, contrary to what the government says, the issue is not reduced to knowing whether we should be more or less optimistic for the coming months or whether the last three months have been rather positive on the job. In its order, the Council of State indicated that, in the circumstances at the time, the government was committing a manifest error of assessment ». In other words, according to the judge, the means used by the reform – radically reducing the rights of employees to fragmented employment – ​​was, in the context, manifestly inappropriate to achieve the aim pursued: to encourage these precarious employees to reduce their recourse short-term jobs and replacing them with stable jobs.

Admittedly, the Council of State did not specify in what economic context a reduction in their compensation could lead job seekers to favor stable jobs over precarious jobs. But it is quite obvious that it is not because a few tens of thousands of unemployed find a job that the millions of others find themselves mechanically in a position to impose their conditions on employers summoned to offer them stable jobs.

The government’s optimism about the economy is puzzling. The recent evolution of the unemployment figures – if we want to look at them with precision – is not as positive as he says

To tell the truth, the very idea according to which reducing the rights to unemployment benefits for employees strengthens “their bargaining power” vis-à-vis employers is circumspect as it contradicts both standard economic theory and recent empirical studies. carried out on the subject. It should also be noted that the Council of State affirmed, based on four studies by Dares, the statistical service of the Ministry of Labour, carried out before the health crisis, that the alternation of periods of activity and periods of inactivity is most often a situation suffered by employees ». Even assuming the Covid parenthesis closed, the observation would thus remain complete.

This brings us to the second point: the government’s optimism about the economy is puzzling. The recent evolution of the unemployment figures – if we want to look at them with precision – is not as positive as he says. Worse, it rather corroborates the idea of ​​a “manifest error of assessment” by the government when it asserts that this reform encourages recipients to refuse short contracts and to substitute stable jobs for them.

Communicating vessels

The government justifies its new decree by a drop in the number of category A job seekers (without any activity) of 267,500 people between May and July. This is certainly good news. But if we consider all job seekers and not just this category, the finding is very different. In the same period (from May to July 2021), the number of jobseekers in all categories (A, B, C, D, E) of 6.7 million people fell by only 2,700 people (– 0 .04%).

In other words, it is less a drop in the number of job seekers than a game of communicating vessels between different categories that we observe.

First effect of communicating vessels, category D, made up of job seekers not required to make positive job search actions, due to an internship, training, illness… exploded, with a increase of 71,000 people between April and July and reached a record of 437,000 people (+20% compared to May, +40% compared to July 2019). Should we see the effect of the pre-election years during which the temptation to empty category A by launching major training plans becomes a habit?

Second effect of communicating vessels, there are 182,400 more job seekers in categories B and C which specifically include job seekers in “reduced activity” supposed to be dissuaded from accepting short contracts by the reform. With 1.364 million job seekers in category C (reduced activity of more than 78 hours), we have also reached an unprecedented record.

In the end, the overall number of job seekers is therefore not falling at all. Job seekers have taken more precarious jobs even though they know that this will mean lower rights for them from the fall. In this respect, one may wonder whether this development does not corroborate the idea of ​​a “manifest error of assessment” by the government when it asserts that this reform encourages recipients to refuse short contracts.

Admittedly, the reform has not yet entered into force but its incentive effects, if we follow the government’s reasoning, should already be felt. The reduction mechanism of the allowance promoted by the reform is based on the observation of employment practices of the twenty-four months which precede the opening of right. It is today’s jobs and periods of unemployment that determine the rights that job seekers will open from 1er october.

Experiencing a period of unemployment between two contracts in the spring or summer of 2021 is already burdening rights which will be calculated in the fall of 2021, in 2022 or in 2023. If we stick to the postulate of government according to which the unemployed optimize their rights, the incentive to avoid short contracts and to favor stable contracts should already be effective. The least we can say is that this is not at all what we observe… Clearly, the unemployed – despite all the optimizing rationality that the government attributes to them – are not yet sensitive to the stimuli constructed by the reform to guide their “behaviors”.

The issue of the presidential balance sheet

Does the government think to convince the Council of State with such weak elements? We can doubt it. But the case is less economic than political. The electoral campaign has already started and the (future) candidate Macron needs to include at least one structural reform in his balance sheet. Since the horizon seems blocked for the pension reform, it is absolutely necessary that the reform of the unemployment insurance can pass.

Whether it is finally implemented or not, the political cost will in any case be paid by the voters who consider this reform retrograde. On the side of the electorate favorable to the reform, on the other hand, the risk, in the event of failure, is that of a trial in amateurism after more than three years of attempts as laborious as they are fruitless. As soon as the Council of State’s decision was announced in June, without knowing what the economic situation would be in the fall, the government thus announced its intention to publish the same decree again despite its suspension and without waiting for the substantive decision.

Given the fragility of its arguments on the economic situation, one might wonder whether the government’s temptation is not rather to substantially modify the justification of the very aims of its reform.

With this new decree, which it knows in advance will be attacked by the unions, the government is giving itself a second and last chance to convince the Council of State in a tight electoral calendar. But how does he intend to obtain a different outcome by presenting a rigorously unchanged text only three months later?

Given the fragility of its arguments on the economic situation, one might wonder whether the government’s temptation is not rather to substantially modify the justification of the very aims of its reform. He would thus give himself the opportunity to justify his reform before the Council of State with new “narrative material” and less likely to be considered as a “manifest error of assessment”.

He could dismiss the idea that it is designed to create more stable jobs. He could explain, more coherently with the content of his reform, that his objective is, by reducing the bargaining power of employees, to encourage them to work at all costs, including by chaining more short contracts. The very noticeable shift in the minister’s language suggests this: for several days now, she has no longer been talking about encouraging stable employment but simply encouraging all those who can to “work more”.

There remains an unknown: what would the Council of State think of such a reversal in the justifications for a reform of which not a comma has been modified?

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