MEDEF pulls out of social security funds

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In June 2001, France's MEDEF employers' confederation confirmed its decision not to appoint new representatives to the administrative boards of the various general social security funds, in protest at the government's use part of the funds' surplus to finance social security contribution exemptions linked to the introduction of the statutory 35-hour week.

On 20 June 2001, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), confirmed its earlier decision (FR0001134F) not to appoint new representatives to the administrative boards of the various jointly managed funds within the general social security scheme (Caisses du Régime général de la sécurité sociale).

MEDEF was reacting to the government's decision to use part of the general social security funds' surplus to contribute to the financing of the social security contribution exemptions linked to the current move to the statutory 35-hour working week (FR9910112F). For the government, the general funds' return to a position of surplus is due in part to new jobs which have been created through the new 35-hour week (FR0001137F). As a result, it sees it as quite natural that the funds should pay part of the bill for this new initiative.

MEDEF has stated that it is prepared to debate and take on genuine responsibilities in the area of social security, provided that 10 new preconditions are met. Five of these relate to strengthening the authority of the social partners in this field (through compulsory consultations, mandatory compliance with opinions supported by a qualified majority of funds' administrative boards and appointment of directors by the funds' boards). A further four preconditions are geared to making social security funds' accounts more transparent. They include the full offsetting of exemptions and new contributions, the certification of accounts and the earmarking of surpluses to paying the funds' debts. The final precondition deals specifically with sickness insurance (FR0105157F). MEDEF is demanding that tripartite discussions on this issue (involving the government, trade unions and employers) be convened within the scope of the current MEDEF-initiated talks over the "overhaul of industrial relations" (FR0102134F).

While the trade unions are united in their opposition to using social security funds to finance social security contribution exemptions, they differ in their criticism of MEDEF's stance:

• for CGT, social security funding should be used to meet social needs and not to finance employment policy. It advocates a redefinition of the various social security bodies, their mandates and funding arrangements, as well as increased democracy in the system as a whole;
• for CFDT, social security budgets should not be treated as appendages of the government's budget. CFDT asserts that the mandates, jurisdictions, funding and powers of the various parties involved should be clarified. It considers that, should MEDEF carry out its threat to withdraw from the social security funds, it is highly likely that the whole joint management system for social security would break down. It states that "the collapse of the parity system would thrust us headlong into state control and by no stretch of the imagination could that be seen as a step forward";
• CGT-FO states that the financial implications of the government's decision to implement the 35-hour working week without affecting company competitiveness has to be borne by the government. CGT-FO fears that MEDEF's pull-out will only encourage the government to tap into social security resources to fund its policies on an even more regular basis;
• CFE-CGC has suggested genuine talks aimed at "establishing a real tripartite system"; and
• CFTC would not like to see MEDEF reduce its role to that of "lobby group" merely defending business interests, and does not want social matters to be directly managed solely by the trade unions and the government.

The issue now is whether MEDEF's decision opens up a possibility for new talks. The timetable is undoubtedly "tight", but can nevertheless be adapted. The cut-off date for appointments to the new social security fund boards is 31 July 2001, and the new boards will meet for the first time on 1 October. However, the government has the authority to postpone these dates. The question now is whether the government, the employers and the trade unions will be willing to undertake an overhaul of the social security system in the run-up to major presidential and general elections in the spring of 2002.