More “Bolshevik” than Macron on pensions and unemployment insurance, you die!

THE ECO SCAN – The En Marche candidate! proposes to make pension and unemployment insurance schemes universal. A reform which smacks of egalitarianism and which comes up against major financing and feasibility problems.

, on pensions and unemployment insurance, borrows a lot from the philosophy of the song Rouge by Jean-Jacques Goldman, in 1993. “There will be gardens, love and bread – Songs, wine, we will lack nothing – There will be sunshine on our foreheads – And happiness in our homes – It’s a new, revolutionary era ”. It is perhaps only the last word that contrasts with today’s world. Because what the leader of En Marche offers! on pensions and unemployment insurance is more egalitarian and universal than revolutionary, and is similar, in many respects, to what Jean-Luc Mélenchon, the candidate for rebellious France, is proposing on the same subjects. However, we know how the Bolshevik revolution of 1917 ended …

“On pensions, the rules will be the same for all plans”

Emmanuel Macron

On pensions, according to his interview in The Parisian and what he said during his press conference to present his program this Thursday morning, Emmanuel Macron wants to create “a true universal pension system” where “1 euro paid for contribution will open the right to the same rights” whatever sector, category or status. “The rules will be the same for all plans,” he explains. This will be the real end of inequalities between civil servants and private sector employees ”. On unemployment insurance, it is more or less the same thing. The former Minister of the Economy proposes “a complete change of philosophy” by leaving a system financed by contributions “to move towards a universal system financed by taxes and open to entrepreneurs, farmers, the self-employed, liberal professions. And also to employees who resign, within the limit of once every five years ”to fight abuse. Finally, he intends to sweeten the unemployment benefits to any unemployed person receiving benefits who would refuse two “credible” job offers – they were called “reasonable” in Sarkozy’s time – understand which correspond to his qualification and with a salary “which does not” is not more than 20-25% ‘lower than in his old post.

However, as attractive as these proposals are, their implementation raises questions of funding and feasibility. Let’s start with pensions. The reform proposed by Emmanuel Macron and which sticks to the ideal system touted by the CFDT is technically complicated to deploy. If only because it is impossible, today, to trace the careers of civil servants beyond 5 years in the past because the data does not exist and is destroyed. And this is also why pensions are calculated on the last 6 months of treatment, and not on the best 25 years as in the private sector. “This reform is long overdue, it will take time,” he warns, without giving any indication of the duration of its implementation. “For those who are less than 5 years from retirement, nothing will change,” he confined himself to specifying.

Aligning the schemes also raises the question of integrating civil servants’ bonuses into the reference salary – bonuses vary from simple to triple depending on the ministries, or even more between public services, and can in some cases represent half of the salary. – and the significant cost of this merger. Moreover, when a more generous regime approaches the general regime – which would then be the case – it pays a balance to the CNAV which amounts to several billion euros. There, the balance would represent tens of billions and would be financed by… the taxpayers.

“We are leaving a system financed by contributions to move towards a universal system financed by taxes and open to entrepreneurs, farmers, the self-employed, the liberal professions”

Emmanuel Macron

The reform of unemployment insurance, the system of which would be nationalized, is of the same ilk. Emmanuel Macron does not intend to change the current compensation rules, wants to extend rights to everyone – at a cost of 2 billion euros per year – and to save no less than 10 billion euros in spending in five years. And this, while Unedic accuses some 4 billion euros of chronic deficit per year and no less than 38 billion of debt at the end of 2018. To finance it, the leader of En Marche! will better fight against fraud (he hopes to withdraw 1 billion per year), make some parametric adjustments (without specifying them), including the introduction of a bonus-malus for companies who abuse short fixed-term contracts to “encourage recourse at the school library”. For the record, the surcharge on short contracts, decided in 2013 by the social partners to encourage employers to hire more on permanent contracts, was a failure. Not only has the rate of fixed-term contract hires continued to rise, now approaching 85%, but the measure only brought in 50 to 80 million euros for Unedic, or three times less than expected. The candidate does not intend, moreover, to tackle the scandal of compensation for intermittent entertainment workers whose deficit has reached, year in and year out, not less than one billion euros per year.

In the end, the reforms both on pensions and on unemployment insurance by Emmanuel Macron are based on a fair anticipation of the reactions of economic actors to the changes initiated. However, and this is what has often sinned in the past, economic agents never behave as politicians and specialists have expected. The way in which they adapt their behavior is always different from what has been anticipated. On this point, it is likely that the former Minister of the Economy will fall, if he is elected president in May, in the same ways as his predecessors …