Macron Reboots French Economic Overhaul as Yellow-Vest Protests Fade
June 18 2019 - 11:28AM
Dow Jones News
By Noemie Bisserbe
PARIS -- The government of President Emmanuel Macron is
preparing to cut the country's unemployment benefits as the French
leader seeks to reboot his economic overhauls and put months of
violent yellow-vest protests behind him.
The government said Tuesday it planned to issue a decree in July
capping the amount people can claim in unemployment benefits and
extending the period people must work to qualify for the aid. The
government will also increase payroll taxes on companies that use
too many short term contracts -- a practice the government blames
for creating an underclass of "precarious" workers.
Mr. Macron is seizing on a collapse in public support for the
yellow-vest protest movement, which paralyzed his administration
when it began late last year. Seven months after waves of
demonstrations first washed over France -- bringing the government
to its knees -- the yellow-vest movement has run out of steam. That
has created a window for Mr. Macron to resume his economic
overhauls.
Prime Minister Édouard Philippe said the current system for
unemployment benefits encourages companies to use temporary instead
of long-term contracts, and doesn't provide enough incentives for
unemployed people to find a new job.
"Our current system doesn't work properly," Mr. Philippe told a
news conference announcing the plans.
Passing the measures by decree could prove contentious, because
that allows the government to circumvent Parliament -- a tactic Mr.
Macron used to change the country's labor market.
Shortly after his election in 2017, Mr. Macron decreed measures
that made it easier for companies to hire and fire. The swift
maneuvering stymied the political opposition and unions, but it
also sowed tensions that exploded in the yellow-vest protests.
Mr. Philippe said the measures his government plans to decree in
July will reduce the number of job seekers by 150,000 to 250,000
and save 3.4 billion euros ($3.8 billion) by 2021.
There are signs that Mr. Macron's earliest overhauls have begun
to lift the economy. In the first quarter of the year, unemployment
fell to 8.7%, its lowest level in 10 years, according to the
national statistics agency. Mr. Macron has said he aims to bring
down unemployment to 7% by the end of his term in 2022.
The cap on unemployed benefits won't impact job seekers at the
lower end of the income scale -- many of whom fueled the
yellow-vest protests. Under the planned law, benefits for job
seekers, who had a gross monthly salary higher than EUR4,500 before
they lost their jobs, will drop by 30% after six months. This
measure won't apply to job seekers aged 57 or above.
Some of the planned measures will make it harder for all workers
to qualify for aid. Job seekers will have had to work for at least
six months of the previous two years to qualify for unemployment
benefits. Currently, people must have worked four months over a
period of two years and four months to qualify for benefits. The
planned measures will extend benefits, however, to people who
voluntarily leave their job or are self-employed, under certain
conditions.
Companies in seven sectors, including food, transportation,
hotel and restaurant industries will also be required to pay higher
payroll taxes if they use short term contracts, starting next
year.
The government will hire an additional 1,000 people to help the
unemployed find work, Labor Minister Muriel Pénicaud said.
In September, the government tried to negotiate an agreement
with labor unions and business lobbies. But negotiations broke down
in February, forcing the government to act on its own.
"We have a reform that is deeply unfair and will affect 100% of
the unemployed," said Laurent Berger, secretary-general of France's
largest union, CFDT, on Tuesday.
"It was up to us, the government, to take back control," Mr.
Philippe said.
Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
(END) Dow Jones Newswires
June 18, 2019 11:13 ET (15:13 GMT)
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