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New legislation that was adopted in France in January 2005 changes the regulations on employment placement services. The state-run National Employment Agency (ANPE) no longer has a monopoly (if only theoretical) over placement services and may create fee-charging subsidiaries, while temporary employment agencies may now also provide employment placement services. The new rules should have a significant impact on the balance between public and private employment agencies. The social partners' reactions have been mixed.
The term 'placement', set out in International Labour Organisation (ILO) Convention No. 96 on fee-charging employment agencies (ratified by France in 1953), had never been subject to a legislative or regulatory definition in French law. Until recently, employment placement had been governed only by case law. The Social Cohesion Law (loi de programmation pour la cohésion sociale) of 18 January 2005 (FR0409104F) ended this practice. It states that 'employment placement is the regular provision of services for matching offers of and applications for employment, without the legal entity carrying out this activity becoming a party to the employment relationships which may arise therefrom'. In other words, it implies a purely intermediary role, which is quite different from that played by temporary employment agencies. The definition is based verbatim on the distinction made in Article 1 of ILO Convention No. 181 on private employment agencies, which has yet to be ratified by France (see below). It draws on only part of the ILO definition, which also includes temporary employment agency work.
ANPE's theoretical monopoly is to end
Until now, the National Employment Agency (Agence nationale pour l’emploi, ANPE), which was created in 1967, had a 'theoretical' monopoly on employment placement. Several not-for-profit organisations were exempt from this rule, in particular, the Employment Agency for Managerial and Professional Staff (Agence pour l’emploi des cadres, APEC). However, the monopoly was theoretical in so far as any non-compliance, for which no penalties were provided in legislation, were always subject to flexible interpretation. Private entities such as recruitment agencies have never been challenged by the authorities.
In addition to the placement monopoly, employers were required to notify the ANPE of all vacancies (FR0505106F). Publications have also been required to pass on any employment advertisements placed with them. This requirement was just as theoretical as the monopoly. Employment advertisement platforms, such as internet sites, have been able to publish vacancies without notifying the ANPE. Officially, the Agency only garnered 35% of total vacancies. Another requirement, which has been enforced, is that job-seekers register with the ANPE. Otherwise they do not receive benefits.
The scrapping of the state-run monopoly, or rather the move to bring legislation into line with reality, had been on the government's agenda for some time but was postponed several times. The new law clears the way for the ratification by France of ILO Convention No. 181, which was adopted in 1997. This Convention recognises and regulates 'the role which private employment agencies may play in a well-functioning labour market'. It should be noted that, in addition to the language used to define placement, the law of 18 January 2005 replicates the Convention’s two guiding principles: free placement services for jobseekers (employers may be charged for services); and non-discrimination.
The real change is not so much in itself the end of the state placement monopoly, especially since the requirement for job-seekers to register with the ANPE has been maintained, as two new initiatives:
- the ANPE may now create subsidiaries; and
- temporary employment agencies may now also provide employment placement services.
ANPE now able to set up subsidiaries
In exchange for the end of its theoretical monopoly and within the framework of its mandate of assisting job-seekers and employers with vacancies, the ANPE now has the authority to set up subsidiaries or purchase a stake in other entities. These subsidiaries will be able to charge employers for services provided.
The ability to develop for-charge initiatives, possibly in association with private entities, will, for example, enable the ANPE to manage employee redeployment schemes set up by companies as part of their 'plans to safeguard employment' (which have replaced the redundancy plan since 2001 -FR0107172F). The Agency will also be in a position to charge for recruitment advice, using 'simulation-based testing' for example. This method was developed and registered by the ANPE. It is designed to go beyond the traditional selection criteria (qualifications, experience etc), using a battery of tests geared to identifying the genuine suitability of the candidate for the job.
As a result, the ANPE, which has recently outsourced many of its activities, will be able to provide services to compete with its own providers. It will also be able to offer new corporate services. To this end, it has recently created a marketing division.
Two new markets for temporary employment agencies
Prior to the 18 January 2005 law, temporary employment agencies were prohibited from providing any other types of labour market services. Under the new legislation, they are now permitted to offer recruitment services leading to both fixed-term and open-ended employment contracts. This will place them in direct competition with recruitment agencies. Indeed, the temporary agencies' financial strength and highly developed nationwide network undoubtedly gives them a competitive advantage. However, in France recruitment agencies specialise in higher-end jobs, a fact that should initially afford them some protection. It is to be expected that temporary employment agencies will use the section of the job market they know best (mainly unskilled labour) as a springboard gradually to break into middle management, where they will face fierce competition from recruitment agencies. The results-based payment system and 'industrialised' recruitment process operated by temporary employment agencies are radically different from those of French recruitment agencies, which are now fearful of cut-throat competition on prices.
In addition to providing corporate services, temporary employment agencies have also expressed interest in the placement of unemployed people. They intend to act as a service provider for the ANPE, the National Union for Employment in Industry and Commerce (Union nationale interprofessionnelle pour l’emploi dans l’industrie et le commerce, UNEDIC) and the General Councils (Conseils généraux) - departmental bodies responsible for unemployed workers not eligible for unemployment benefit and who are in receipt of the Minimum Income Benefit (Revenu minimum d’insertion, RMI). There were several pilot projects of this nature prior to the endorsement of the new law on 18 January 2005.
Reactions
There was less reaction to the scrapping of the ANPE monopoly, which in reality did not exist, than to projects allowing private entities to place unemployed people in jobs. The Movement of French Enterprises (Mouvement des enterprises de France, MEDEF) employers' confederation, which had been calling for the dismantling of the ANPE monopoly for a long time, has expressed satisfaction at these first steps. However, the trade unions have strongly criticised the priority given to financial considerations and have pointed to a danger that people will be forced to take any job offered. In addition, trade unions organising ANPE staff have stressed the high costs involved and the fact that the state-run employment service does not enjoy a favourable client-to-advisor ratio: each private consultant deals with between 30 and 40 job-seekers compared with 200 for ANPE advisors. They have also come out against the 'commodification' of the Agency’s services.
Commentary
The main pilot project for the changes introduced by the new law has involved the subcontracting of job-seeker placement services to Ingeus, an Australian-based company. UNEDIC referred 6,000 individuals to the company. It appears that the determining selection criterion was the length of benefit period. Those selected were not those that might be thought to be in the greatest need of assistance - ie job-seekers approaching the end of their benefit entitlement - but rather people who had been unemployed for only a short period. These are people with their whole benefit entitlement before them, and therefore they are potentially very costly for UNEDIC. Of the concerns raised above, that bearing on the priority of financial considerations already appears to be legitimate. (Yannick Fondeur, IRES)