Unemployment: reduction in the allowance on July 1, 2021 … in the midst of the crisis

Already criticized before the health crisis, the reform of unemployment insurance continues to please no one, and especially not the unions. But the government, which is at the origin, loves it … and will indeed launch it. First stage: July 1, 2021… with a potential reduction in the allowance for hundreds of thousands of unemployed, while the economic crisis is in full swing.

The reform of the calculation of the allowance in force from July 2021?

Despite opposition from unions and employers alike, for different reasons, the government announced Tuesday, March 2, 2021 that the first stage of unemployment insurance reform will be launched in July 2021. This is the part that will severely impact the incomes of the unemployed since it is about the reform on the method of calculation.

While only days worked are currently counted to calculate the amount of unemployment benefit, the reform will also take into account days of inactivity, up to a maximum of 43% of the total number of days. Result: the unemployed will be compensated for longer… but with less money.

The government is fully aware of this: the Ministry of Labor estimates, for example, that an employee who worked for the minimum wage for eight months out of two years will have compensation which will be reduced by more than 300 euros and will drop from 985 euros to 667 euros. In compensation, this allowance will be paid for 14 months against 8 months previously.

Towards an explosion of economic insecurity?

The unions have clearly identified the main problem of this reform … which is accentuated with the economic crisis and the thousands of jobs eliminated in 2020 and 2021. If the allowance goes down, it simply will not be the case for the expenses of the unemployed such as rent, telephone, energy or even food. Amputating their income therefore risks increasing financial insecurity, judges the CFTC, which has already exploded since the start of the health crisis.

However, the number of unemployed affected by this part of the reform is not insignificant: more than 800,000 according to the government.

Other changes to come

However, the reform does not stop there and from July 1, 2021, it is the unemployed under 57 years old with an allowance of more than 4,500 euros who will be affected, again with a decrease in the amount of up to 30%.

And the changes will continue with two dates. The first, in October 2021, will reduce the opening of rights: it will be necessary to have worked at least six months, against four currently. Except that there is a condition precedent for the entry into force of this section of reform: a resumption of activity and hiring, otherwise it will be postponed until the lights are in the green.

Finally, September 2022 will see the entry into force of the “company” part of the reform, with the bonus-malus on short contracts. What dissuade some companies from hiring, since the economic crisis will not be resolved by then. And, above all, enough to spare companies a little compared to the unemployed who will suffer the full force of the reform from mid-July 2021.