In the midst of the Euro zone crisis, France faces its own economic problems. The country’s state audit office, the Cour des comptes, has urged the government to review the funding of unemployment benefits for French citizens, saying that the current system is “unsustainable”.
The Cour des comptes labeled the benefits as costly and ineffective, since the funds are not reaching those who need them most. According to the Cour’s January 22 report, the current benefits policy cost 2.5 percent of the country’s GDP in 2010.
The current funding system is expected to reach a deficit of 5 billion in 2013. According to the Cour, the French system is largely to blame for the deficit, as it is much more generous than similar benefits programs in neighboring countries. For example, the current allocation is between 63 and 93 percent of the previous incomes of the unemployed. In addition, the minimum compensation length for unemployment benefits in France is two years, compared to one year in Germany.
However, a disproportionate number of French citizens benefit from these provisions, as generous as they seem. Although France has 3.13 million unemployed citizens, thousands do not receive any compensation in spite of their qualifications, and the number of job seekers receiving benefits has declined (currently, 44.8% receive benefits, down from 48.5% in 2009).
The Cour also fears that the current system decreases motivation in beneficiaries because it provides them with sufficient compensation to maintain an unemployed status. The Cour urges the government to tackle the issue — it has called for increased incentives for beneficiaries to return to work, as well as the review of beneficiary activity.
The report also criticized the government’s response to the economic crisis — the cutting of jobs in place of cutting working hours, especially with employees under short-term contracts.
In essence, the Cour demanded a reform to enact a fairer and less expensive system. The pursuit of reform may lead to complete revision, but France has promised to do whatever it takes to amend the system and return to a “reasonable deficit”, according to Employment Minister Michel Sapin.