Reduction in Unemployment Benefits
30th May 2024
The government have announced a major reform of unemployment benefit.
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Reduction in Unemployment Benefits
30th May 2024
The government have announced a major reform of unemployment benefit.
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The changes mean applicants will need to be employed for longer in order to be entitled to allocation chômage, which will be available for a shorter period.
Over recent years there has been a repeated toughening of the right to unemployment benefit, as well as a reduction in entitlement.
Prior to 2019 access was granted after 4 months employment during the previous 28. However, in that year cover was reduced for those who had worked less than 24 months, along with a reduction in the amount of benefit paid to the highest earners, and the way the daily benefit was calculated.
In 2021, the right to unemployment benefit was restricted to those who could justify having worked at least 6 months over the previous 24 months.
The following year the rules changed again to allow the government to modulate the duration of cover to the rate of unemployment.
In December 2024, the minimum period of employment will increase to 8 months, over a shorter 20 month period, for those under 57 years of age.
In addition the maximum period of cover will be 15 months, against 18 months currently.
Slightly separate, more generous rules have applied in the past for those aged 53+ but the minimum age is now being raised to 57+. They will be required to have had at least 8 months employment in the previous 30 months (previously 36 months). In addition, their period of cover will also be reduced to 22.5 months (previously 27 months). Conversely, those aged 57+ will be able to take a new job and, for a year, retain their unemployment benefit, up to the level of the salary of their previous employment, subject to a maximum amount.
The counter-cyclical reform of 2022 will also be modified so that when the level of unemployment is below 6.5% the duration of the benefit will be reduced by 40% (previously 25%) to 12 months, or 18 months for those 57+. The rate of unemployment is currently 7.5%.
Finally, the amount of unemployment benefit will no longer vary depending on the number of days in the month (between 28 and 31), but will be based on a fixed number of 30 days per month. This measure will result in a loss of benefit of around 5 to 6 days for unemployed people who have not worked for an entire year.
The new rules will apply to those whose employment contract terminates after 1st Dec 2024. The government is proposing to publish a decree setting out the rules in July.
The government claims that the rules are being changed due to the strength of the economy and the reduction in the number of unemployed, in line with the reform of 2022. However, one of the strongest critics of the reform, the CGT trades union, considers that the changes are "purely budgetary" and they will impact most adversely on young people.
Discussions are taking place with the trades unions and employers about the changes, and there may well be some refinement of the rules as a result of those discussions.
Despite the changes, the system remains one of the most generous in Europe, particularly on the level of the benefit, with a replacement rate of around two-thirds of salary.
The savings are estimated by the government to be in the order of 3.7 billion euros a year, equivalent to around 10% of the current bill. The government is currently searching for tens of billions in budgetary savings in order to comply with European rules on the public debt, which has reached 5.5%.
Since 2019, business owners have also been entitled to unemployment benefit, although on very different, and more difficult terms, which you can read about in Unemployment Benefit for Business Owners.