Unemployment allowance entitlement to be cut

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In September 2003, the French government announced a cut in the entitlement period for the 'specific solidarity allowance' (ASS) paid to unemployed people who are no longer eligible for unemployment benefit. The move has been opposed by trade unions and the political opposition.

The 'specific solidarity allowance' (allocation de solidarité spécifique, ASS), which was created in 1984, is a benefit paid by the state to unemployed people who have exhausted their entitlement to unemployment benefit, and who can demonstrate that they have been in employment for five of the previous 10 years. The benefit – a maximum of EUR 407 per month - operates on a sliding scale based on income and can be extended indefinitely every six months provided that the recipient is actively seeking employment.

In September 2003, as part of its preparations for the 2004 state budget, the conservative government announced changes to the ASS scheme. Starting in January 2004:

• the entitlement period will be limited to two years for those becoming eligible from July 2004 and to three years for existing recipients;
• this restriction will not affect recipients aged 55 and over, but they will lose the 40% bonus they currently receive; and
• a lower means-tested ceiling for couples, introduced in 1997, which currently applies only to new benefit claimants, will affect all ASS recipients.

These changes are expected to save EUR 150 million in 2004 and EUR 500 million in 2005. They will affect 130,000 people in 2004 (out of a total of 318,000 ASS recipients as of July 2003) and more thereafter. This government initiative comes at a time when a December 2002 agreement between the social partners on the unemployment insurance system - the National Union for Employment in Trade and Industry (Union nationale pour l'emploi dans l'industrie et le commerce, UNEDIC) - is set to disqualify between 150,000 and 180,000 people from unemployment insurance entitlement from January 2004 (FR0301106F). A third of these claimants are to be automatically picked up by the ASS scheme, with a further third becoming eligible for the minimum integration income (revenu minimum d’insertion, RMI) (FR0007174N). The remainder will not be entitled to any benefits at all. In anticipation of an increase in the number of benefit recipients, the government’s latest decisions are designed to shift some unemployed people no longer entitled to unemployment benefit on to the RMI when responsibility for this benefit is transferred to the départements (FR0306103F). As a result of the changes, claimants are to be moved more quickly from one scheme to another in the three-tier unemployment benefit system, with a cut in benefits at each stage.

As justification for his decision, François Fillon, the Minister of Social Affairs, stated that it is not possible to provide open-ended benefits to unemployed people. He pointed out that the social partners had also decided to cut the benefit entitlement period. The government is also banking on a fall in unemployment as from spring 2004. Its goal is to focus resources on a policy of getting people back into work as quickly as possible.

In light of the fact that unemployment has started to climb once again (FR0309104F), the cut in the ASS brought harsh criticism from trade unions and associations of unemployed people. Among the political parties, the Socialist Party (Parti Socialiste) and the Communist Party (Parti Communiste) have opposed this initiative and even within the ranks of the governing Union for the People's Movement (Union pour un mouvement populaire, UMP), questions are being raised about the government’s decision, with many viewing the saving as too small in comparison to the lost revenue resulting from a 3% cut in personal income tax (EUR 1.8 billion).