Employment bonus: exclude apprentices and better include part-time workers

This report on this bonus, which costs nearly 11 billion per year, was carried out at the request of the Senate Finance Committee.

Until now, there was no detailed study on the effects of this bonus, created in 2016 with the dual objective of supporting the purchasing power of low-income workers and encouraging employment, stressed the president of the fifth chamber of the Court of Auditors, Sophie Thibault, before this commission.

The Court of Auditors relied on a study commissioned from economist Antoine Bozio and a survey conducted with Ipsos among 6.000 people. It did not address one of the criticisms leveled against this bonus, namely that it was a trap for low-wage earners.

According to this report, the activity bonus "has largely contributed to eliminating situations of poverty for people who work full time", but not for part-time workers, Ms. Thibault indicated.

The study found no effect of the bonus on the employment rate. According to the survey, 80% of respondents do not take it into account in their employment behavior (actively looking for a job, accepting or refusing it: editor's note), perhaps due to the difficulty in anticipating its amount, she explained.

The Court recommends "ending the eligibility of apprentices and employees combining work and retirement," two categories for whom the bonus "plays no role in incentivizing employment." This would allow for annual savings of over 300 million euros, according to the Court.

Today, "this activity bonus is only for apprentices who receive more than 78% of the minimum wage, so it goes to those who are the best off (...), a contradiction," approved LR Senator Arnaud Bazin, special co-rapporteur.

The report proposes several ways to increase the effectiveness of the bonus for returning to or remaining in employment.

The "best option" is "undoubtedly" the payment of the individual bonus from the first euro --this bonus is currently paid to people earning at least 50% of the minimum wage--, in order to include part-time people, who are often poor, according to Ms. Thibault.

But this would require, in order to compensate for 900 million in additional costs, also reducing the scale at the top, she noted.

The 50 euro increase in the activity bonus for three million households decided by the government and which came into effect in April "departs from the recommendations of our report", noted Sophie Thibault.