ENTITIES AND PUBLIC POLICIES
STATE MEASURES
TO ASSIST
EMPLOYEES
WORKING
AT COMPANIES
IN DIFFICULTY
Review for 2008-2019
Special Public Report
Summary Report
July 2020
2
Summary of the Thematic Public Report of the Cour des comptes
g
DISCLAIMER
This summary report is intended to facilitate the reading and use
of the Audit Office report.
The Cour des comptes [Audit Office] is only accountable for the
report.
The responses from the administrative bodies and ministries
concerned appear in the follow-up to the report
.
3
Summary of the Thematic Public Report of the Cour des comptes
Summary
Introduction
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1
Strengthening the prevention of job losses
7
2
Better targeting redeployment schemes for the most
vulnerable employees
11
Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5
Summary of the Thematic Public Report of the Cour des comptes
Introduction
Large redundancy plans, and more broadly all redundancies for economic reasons,
are usually a by-product of economic crises and have become a less frequent
form of employment adjustment in recent years , even if some of these plans
have remained highly publicised . In the face of accelerated changes in economic
activity, but also in order to face up to the structural changes brought about
by economic change, foremost among which are digitalisation, robotisation and
the environmental transition, labour market adjustment methods have changed
radically in the space of a few years . Therefore short-term contracts have become
more widespread, as have amicable terminations of employment contracts .
The measures to assist employees working at companies experiencing difficulties
and restructuring, or even disappearing, have not been sufficiently adapted to
changes in the labour market and do not really seek to promote a return to
long-term, quality employment for the most vulnerable employees . It is important
for the State both to continue the efforts undertaken to prevent job losses when
there are clear economic difficulties and to better target redeployment aid for
those employees most at risk of downgrading or insecurity .
The following diagram shows the different mechanisms examined in this report .
1
The Cour des comptes’s investigation was completed before France entered into recession in
the spring of 2020 due to the consequences of the Covid-19 epidemic . This should lead to an
increase in redundancies for economic reasons, even though the massive effort made to prevent
job losses through partial activity is intended to contain the scale of these redundancies .
6
Introduction
Summary of the Thematic Public Report of the Cour des comptes
Specific measures to prevent job losses and to help redeploy employees
made redundant for economic reasons
Source: Cour des comptes
Detecting difficulties
and preventing job losses
Collective performance agreements
(companies)
Monitoring systems
, Weak Signals
(Status)
FNE-Formation
(State)
Partial activity:
Funding of employer's
(compensation, Unédic, State);
Exemptions from social security
contributions(Social Security)
Financing of training options
(Opco)
Redeployment assistance
for employees who have lost
their jobs
Funding of
Revitalisation Agreements
(employers)
Severance pay
(employers) ;
exemptions from taxes (State) and social
security contributions (Social Security)
Validation/approval of
job protection plans
(State)
Financing of PSE (job protection plan)
measures outside the CSP (job security contract)
(employers, where appropriate, the State,
via
the
redeployment support cells and tax exemptions
for certain redeployment assistance measures
and/or European Union via the European
Globalisation Adjustment Fund additionally);
exemptions from social security contributions
for certain redeployment assistance measures
(Social Security)
Job security contract
Financing of the allowance
(employers, Unédic, State)
Financing of return-to-work support
(Unédic, State)
Implementation of support
(National Employment Agency,
private placement operators)
Financing of training measures
(National Employment Agency,
personal training account, European Union)
7
Summary of the Thematic Public Report of the Cour des comptes
Strengthening the prevention
of job losses
More flexible forms
of employment adjustment
in the face of economic
difficulties
In
order
to
adapt
more
rapidly
to
changes
in
economic
activity,
whether these changes are cyclical
or are the result of more structural
developments, firms have changed
their hiring behaviour . They are opting
to use more temporary contracts
(fixed-term contracts and temporary
assignments)
and
are
developing
subcontracting . This long-term trend
became more significant after the
2008 crisis . In recent years, public
authorities have taken measures to
encourage amicable termination of
employment contracts in order to
make the labour market function more
smoothly . The contractual termination
of employment contract, created in
2009 for individuals, was extended in
2018 to a collective framework .
This profound change in the labour
market, coupled with the improved
economic situation between 2016
and 2019, has considerably reduced
the use of redundancies for economic
reasons over the long term, which
is the most costly and protective
measure because of the employee
redeployment obligations it entails .
In 2018, this procedure was only very
marginal in terms of the number
of people (nearly 135,000 people)
whose employment contracts were
terminated .
However, the downward
trend
in
the
use
of
economic
redundancies
does
not
prevent
one-off increases in the face of
economic crises forcing companies
to reduce their workforce .
8
Summary of the Thematic Public Report of the Cour des comptes
Employees
who
lose
their
jobs
due
to
the
economic
difficulties
encountered
by
their
companies
benefit from different redeployment
measures depending on the nature
and procedure for terminating their
employment contract . Holders of a
temporary
employment
contract,
when it is not renewed, do not benefit
from any specific support, regardless
of the length of time they have been
with the company or their difficulties
in finding a job . They may register
with
the
National
Employment
Agency, but are not eligible for the
more favourable measures granted to
employees on permanent contracts
who
are
dismissed
for
economic
reasons .
Strengthening the prevention of job losses
Changes in terms and conditions of termination of employment contracts
(all types of contracts)
0
10
20
30
40
50
60
70
80
90
100
In %
1993
1996
1999
2002
2005
2008
2011
2014
2017
Resignation
Contractual termination
End of trial period
Non-economic dismissal
Economic dismissal
Retirement
Other reasons
Source: Dares
Reading note: the graph includes the termination of short-term contracts before
their planned end date. The share of short term contracts in broken contracts has
decreased over the years, from 26% in 2001 to 12% in 2017.
Scope: Metropolitan France, companies with 50 or more employees in the private
sector (excluding agriculture, excluding temporary workers), MMO field (movement
of workers).
9
Summary of the Thematic Public Report of the Cour des comptes
Efforts needed to prevent job
losses in companies in diffi
culty
In
view
of
the
consequences
for
employees
and the
economy, the
State is seeking to prevent job losses
by identifying companies in diffi
culty
as early as possible and offering them
solutions to get through the crisis
period .
This role is the responsibility
of
the
regional
directorates
for
companies, competition, consumption,
labour and employment (Direccte) .
Commissioners
for
Restructuring
and
the
Prevention
of
Business
Diffi
culties
(previously
known
as
the
Commissioners
for
Productive
Recovery) and innovations, such as
the Weak Signals platform have been
created as steps forward that should
be pursued to improve the structuring
and sharing of information between all
the players concerned .
The
main
mechanism
used
by
the Direccte to help companies in
diffi
culty to maintain employment is
partial activity (formerly known as
partial unemployment), a mechanism
co-financed by the State and Unédic
(€93 million in total in 2019) .
Despite
a reform in 2013 to make it easier
for companies to make use of this
scheme, partial activity has remained
underused in France for several years .
Strengthening the prevention of job losses
The different support measures for employees according to the job
adjustment procedures
Source: Cour des comptes
10
Summary of the Thematic Public Report of the Cour des comptes
However, as soon as lockdown was
announced to slow the spread of the
Covid-19 epidemic in March 2020, the
Government introduced exceptional
measures to make the system more
responsive and more beneficial for
companies . Nearly €31 billion has
been made available by the State and
Unédic to finance this system in 2020 .
FNE-Formation
was
not
being
broadly used (€7 million in 2019)
and has therefore been temporarily
modified to allow training schemes for
employees placed in partial activity
to be funded . In terms of collective
bargaining, which has traditionally
not been very dynamic in France so
as to promote internal flexibility, the
labour code was simplified in 2017
with the introduction of collective
performance
agreements
enabling
companies to negotiate measures to
maintain employment .
Strengthening the prevention of job losses
11
Summary of the Thematic Public Report of the Cour des comptes
Improving the monitoring
of employment safeguard plans
Depending
on
the
manner
in
which the employment contract is
terminated, the State plays a more
or less important regulatory role .
This is particularly the case for job
protection
plans
(in
companies
employing at least 50 employees
who plan to lay off at least 10
employees over a period of 30
days)
and
for
the
revitalisation
of territories . The number of job
protection plans (PSE) has fallen
sharply since 2008 (138 plans in the
third quarter of 2019) .
State
intervention
throughout
these
procedures
has
led
to
a
very significant reduction in their
conflictual nature . However, with
the lack of sufficient available data,
the PSE implementation monitoring
system still needs to be improved .
Moreover, the process of territorial
revitalisation is still delicate and its
outcome has not been assessed .
Support measures to be better
adapted according to the
difficulties of returning to work
The obligation to redeploy employees
who have lost their jobs for economic
reasons
lies
primarily
with
the
employer . Depending on the size and
financial situation of the company
(see following diagram), employees
made
redundant
for
economic
reasons are offered either long-term
leave,
with
variable
content
and
entirely paid for by the company, or a
job security contract, implemented by
the National Employment Agency and
private placement operators selected
by the public employment service .
Redundancy
payments, which
can
sometimes be high, are in addition
to
the
redeployment
measures .
Favourable tax and social security
regimes encourage the negotiation of
so-called «supra-legal» indemnities,
which
may
lead
employees
and
companies to opt for them instead, to
the detriment of the budget allocated
to redeployment assistance measures .
Better targeting redeployment
schemes for the most vulnerable
employees
12
Summary of the Thematic Public Report of the Cour des comptes
Redeployment
leave
is
exclusively
financed by companies and its cost is
not known, unlike the cost of the job
security contract, which half of the
employees dismissed for economic
reasons have access to .
Co-financed
by Unédic, companies and the State,
this scheme represented a cost of
€1 .393 billion in 2019, a sharp drop
from the peak reached in 2014 with
€2 .186 billion .
The job security contract, a scheme
that combines more advantageous
compensation
than
ordinary
unemployment benefits and intensive
support for a maximum period of
one year, has two main limitations .
On the one hand, it does not aim
to
protect
against
professional
downgrading: the reform introduced
in 2015 encourages a rapid return to
employment, without consideration
for the sustainability beyond six
months, nor the quality of the job
found, whereas this support system
was designed to promote access
to training with a view to securing
professional careers in the medium
term .
Moreover, eligibility for this
scheme is based on the status of the
employee dismissed for economic
reasons, and not on the reality of
his or her difficulties in returning to
work .
Redeployment
schemes
do
not
adapt to how far removed certain
employees may be from the labour
market and are still associated with
the status of an employee dismissed
for
economic
reasons,
whereas
this procedure is increasingly less
common .
This observation calls for
the framework for employee support
to be rethought .
Better targeting redeployment schemes for the
most vulnerable employees
Mechanisms to support employees made redundant for economic reasons according
to the characteristics of the company
Source: Cour des comptes
13
Summary of the Thematic Public Report of the Cour des comptes
State intervention
that emphasises the disparities
in the resources committed,
in favour of employees of large
companies
In certain sensitive mass redundancy
plans, the State intervenes directly
to
provide
additional funding for
redeployment
assistance
measures
(for example, in the cases of Gad and
Mory Ducros presented in this report) .
To this end, it uses redeployment units
and enhanced support measures, with
varying levels of intensity from one
redundancy plan to another .
This State intervention emphasises
the
differences
in
the
resources
committed to employees depending
on the size of the company . The same
applies to the way in which assistance
from the European Globalisation Fund
(EGF) is directed towards a few large
companies in France .
Other
countries
made
different
choices . For example, the Swedish
social
partners
have
set
up,
by
collective
agreement,
mechanisms
to pool the redeployment aid finance
before the public employment service
intervenes .
This
pooled
financing
enables large companies to contribute
to
the
financing
of
restructuring
affecting subcontractors . Spain, for its
part, has chosen to entrust the regions
with the management of applications
for
EGF
assistance,
preferring
a
sectoral
approach
which
enables
SMEs to benefit from this assistance .
*
**
Following its work, the Cour des
comptes makes five recommendations
aimed in particular at making the tools
for preventing redundancies more
effective, improving the quality and
targeting of support for the groups
furthest from lasting employment and
facilitating SME access to European
aid .
Better targeting redeployment schemes for the
most vulnerable employees
15
Summary of the Thematic Public Report of the Cour des comptes
Recommendations
Strengthen
the
effectiveness
of
tools to prevent job losses through
faster and better shared knowledge
of companies’ difficulties.
As part of the deployment of the
digital tool for analysing and sharing
economic data Weak signals (Signaux
faibles), both in crisis situations and
in anticipation of them, the sharing
of
information with the
regions
should be improved and based on
this data, a strategy for detecting
the consequences of a company’s
difficulties on its economic partners
should be established
(Ministry of
the Economy and Finance)
Improving the quality
and targeting of support for those
who have the greatest difficulty
in finding long-term, high-quality
employment.
After
an
in-depth
impact
study,
access to the job security contract
should be extended to holders of
fixed-term
employment
contracts
employed
in
companies
placed
under collective proceedings, subject
to a minimum period of service in
the company
(Ministry of Labour,
Unédic)
Make it compulsory for companies
to enter financial data (forecasts
and
actual
figures)
relating
to
the redeployment plan into the
information and monitoring system
for job security plans
(Ministry of
Labour)
Evaluate
the
comparative
performance
of
the
National
Employment Agency and private
placement
operators
in
terms
of return to long-term, quality
employment under the job security
contract and the redeployment
units
(Ministry of Labour, Unédic)
Facilitating SME access to European
assistance
Develop the strategy for using the
European Globalisation Adjustment
Fund to benefit employees of SMEs
in difficulty in an approach that takes
account of sectors and territories
(Ministry of Labour).