President vows to reshape economic and social system
New Year greetings to business and employment stakeholders – Speech by M. François Hollande, President of the Republic (excerpts)
Paris, 18 January 2016
The French model, this new pathway, must rest on three pillars. The first is the competitiveness of businesses. The Responsibility and Solidarity Pact represents a major effort for our public finances – €40 billion; it’s brought significant but still insufficient results. Labour costs in industry are now below those of our German neighbours. As I’ve said, businesses’ cash flow has picked up again, enabling investment; the pace of job creation has resumed; and employees have been able to enjoy additional spending power.
Nevertheless, we must conduct an assessment of the Responsibility and Solidarity Pact; that’s essential in order for full light to be shed on the various players’ commitments. It will be the purpose of the meeting planned for the end of this month, to be led by the Prime Minister. There remains in fact a final stage, in 2017, for tax reductions on businesses, and the question arises of the very future of the Competitiveness and Employment Tax Credit [CICE].
My desire – and I announced it as early as 2014 – is to transform the CICE as quickly as possible into a definitive reduction in social security contributions.
The advantage of this switch is, first of all, clarity in the accurate representation to businesses of social security deductions. It’s also long-term tax reductions so that there’s no doubt about the commitment made. Finally, the advantage is extending the reduction in labour costs to all the country’s activities. But considerations of urgency require us to plan ahead.
So every business with fewer than 250 employees which recruits, in particular, a young person or a jobseeker, which recruits an employee paid between 1 and 1.3 times the minimum wage, on a permanent contract or a fixed-term contract of six months or more, will be paid a premium of €2,000 a year. Why €2,000 a year? Because this is what’s left over from employers’ minimum wage contributions once all tax reductions have been taken into account, particularly the reductions provided for in the Responsibility Pact.
This mechanism will benefit new jobs provided in 2016, for two years. Why two years? That’s the time it will take for the CICE to switch to a definitive tax reduction, and this mechanism comes into force today. The situation of structural unemployment which our country has experienced over the past two or three decades means employment must be our sole battleground and we must provide stability, transparency and predictability to both employers and employees. This is true in particular for the rules on recruitment and dismissal. There’s room for simplification.
For example, in the event of a job contract being breached, information on the consequences of this decision must be known in advance. So the remaining constraints will be removed from the reform of jurisprudence introduced in the Macron law, through the introduction, among other things, of a ceiling on compensation linked to seniority. The reform of the Labour Code will be embarked on and led by Minister [of Labour] Myriam El Khomri. Building on the Combrexelle report, she must adapt our labour law to the economic realities of businesses and open up a new period for negotiation. Next week, the commission chaired by Robert Badinter will propose major principles of labour law, on the basis of which the law will then set the rules known as the ordre public social [mandatory public regulation], i.e. the guaranteed basic rights for every employee that cannot be disregarded. The rest, i.e. the implementation, will be sent back for collective bargaining without delay.
If the law is passed, it will enable us to rewrite the rules on working hours according to the formula I’ve just proposed. It will make company-level agreements responsible for setting the way working hours are organized without calling legal hours into question, by making it possible, for example, to set the overtime rate and the number of additional hours or to further modulate working hours even beyond the end of the year.
The bill will also attach greater importance to collective agreements, and when they’re reached in the interests of employment, the stipulations of those agreements will be able to prevail over those of job contracts. This is a significant development and it, too, will enable us, if the employers and unions take ownership of it, to adapt labour law – without calling into question the fundamental safeguards – to economic realities and specific local characteristics. That’s what is being done and will be done for the sake of competitiveness.
But the second pillar of the social system I want to sketch out for the coming years is workers’ job security. As everyone can see, in a changing world employees will have to face more varied professional careers, with changes of employment and sometimes of profession, and alternations between working periods and training periods.
Everything must be done to organize those lives so there are no drastic changes, no uneven periods, but rather, on the contrary, a sort of continuity of skills and experience.
That’s the goal of the personal activity account (1).
That account is the “capital” of every worker. It’s the sum of the rights accumulated through a professional life: the right to training, specific leave, validation of experience-based skills, and save-as-you-earn schemes. Workers will be free to have their own personal activity accounts to organize transport, promote personal projects, create businesses and prepare their retirement. The social partners, too, share this major ambition, its first stage will come into play next year, and the provisions will be made in the bill put forward by the Minister of Labour.
Workers’ job security also demands that our social model be made intelligible to everyone – employees but also company bosses, self-employed traders and creative professionals, and that’s why the plan for a universal social rights portal will enable everyone to access this information. There’s a forthcoming engagement for the employers and unions, a major opportunity to guarantee this job security but also a return to employment: namely the renegotiation of the convention on unemployment insurance.
It will provide an opportunity to review a number of rules and redirect funding. The goal is to prevent the return to work from meaning a loss of rights, but above all to support the return to work and train unemployed people in today’s and tomorrow’s jobs. Let me remind you that the compensation period in France is the longest in Europe, but the training period for unemployed people is the shortest. That’s what must be changed. It’s the responsibility of employers’ and employees’ organizations. I trust in them to finalize the signature of a new convention on this basis, and do everything to ensure the return to employment is encouraged, supported and funded.
The third pillar of the social model is about offering new opportunities to everyone. I remind you that a million unemployed people today don’t have the baccalaureate and 700,000 don’t have the CAP [vocational training certificate].
So I’ve announced a training programme for 500,000 job-seekers, i.e. double the number in 2015.
This isn’t a short-term measure or a statistical trick, because you can’t correct statistics, because what counts is employment and nothing else, and because we’re judged on the ability to create lasting employment and not on measures which focus only on deadlines.
So it’s a basic, structural measure; the challenge is to fill jobs which haven’t been filled due to a lack of qualified personnel.
The challenge is to grasp the new opportunities linked to expanding sectors: digital technology and the energy transition, but also traditional activities for which skilled workers are increasingly in demand: aerospace, construction, security, tourism, care services.
Finally, jobseekers’ training must also be geared to starting up businesses, and new financial resources must be made available for this. The state will play its part in achieving this goal, which is a major one for our country and for the hope we can give to those who have been waiting too long if not for a job, for training schemes which enable them to find one as quickly as possible.
So the state will make €1 billion available to mobilize everyone involved. The Pôle Emploi [governmental employment agency] will implement new training schemes, AFPA [adult education and training organization] and other bodies will be mobilized for this task, and employers and unions will make their own contribution and draw up training schemes linked – sector by sector, region by region – to businesses’ needs.
Apprenticeships must be a major priority, and here too, measures will be taken. The government will broaden the offer and extend training periods, and bring in Ministry of Labour qualifications, allowing new prospects to be offered, which will enable people to join apprenticeship schemes all year round.
What we want is for young people to join this apprenticeship scheme on a long-term basis, and for employers to accept more of these young people, sending the message that an apprenticeship is a path to success and excellence.
In the same way, businesses which play an active part in écoles de production (1) – some still exist and I want to encourage them – will see their training effort expenses recognized, under the apprenticeship tax. And sectors and businesses wishing to open apprenticeship training centres will be able to do so.
The National Education Ministry will also create 500 new sandwich courses targeting jobs for which we know there will be a significant need in the coming years. (…)
Finally, there’s the vocational training scheme, which isn’t restricted to young people and can apply to jobseekers. I want us to be able to offer it to unemployed people more than we do today. The goal could be to get 50,000 people benefiting from it rather than today’s 8,000. And to do this, the state will provide financial support using assisted jobs as a model. (…)./.
(1) An alternative to mainstream schools, écoles de production provide young people (generally between the ages of 14 and 18) with practical training, which sees them spending two-thirds of their time gaining hands-on technical experience as, for example, mechanics or metal workers.
(2) On 8 March 2015, the Prime Minister announced the creation, from 1 January 2017, of a compte personnel d’activité. This will bring together all the entitlements acquired by a worker (personal training account, occupational risk account, entitlements to unemployment benefits etc.) in an account which the worker can use throughout his or her career.