Unemployment insurance: the government wants to save 400 million euros on negotiated terminations

Labour Minister Jean-Pierre Farandou has agreed to let trade unions and employers negotiate by the end of January on unemployment insurance with the aim of generating 400 million euros in savings per year, particularly on negotiated terminations, it was learned Sunday 30 November from the Labour Ministry.

"I sent (on Saturday) a letter to the social partners asking them to open interprofessional negotiations focusing, in particular, on negotiated terminations," Mr. Farandou said in a statement to AFP.

"The framework letter of August 2025 will be withdrawn as soon as the trade union and employer organizations have begun their negotiations and established a timetable allowing them to reach an agreement before the end of January 2026," he continued.

"The objective is to generate savings of at least 400 million per year, in a full year, with effects from 2026 onwards," he specifies.

In its policy framework letter in August, the Bayrou government asked social partners to negotiate a new unemployment insurance agreement, achieving savings of 2 to 2,5 billion euros per year between 2026 and 2029.

She set November 15 as the deadline for an agreement, but the discussions never took place.

On November 14, five trade unions (CFDT, CGT, FO, CFE-CGC and CFTC) and two employers' organizations (CPME and U2P) asked the government to withdraw this financial framework, proposing in return to open negotiations on negotiated terminations and short-term contracts.

"The government will give precedence to the negotiation initiated by the social partners over the 2025 framework document, which will consequently be withdrawn as soon as the commitment to a negotiation is formalized and a timetable allowing for an agreement to be reached by the end of January is established," the minister replied in his letter sent on Saturday.

"If this negotiation does not succeed within this timeframe, given the deteriorating state of public finances, the government will be forced to take responsibility once again," he continued.

Created by the "Labor Market Modernization" law of 2008, the negotiated termination agreement allows employees and their employers to mutually end a permanent employment contract. The employee receives a specific severance payment, negotiated with the employer, and can subsequently receive unemployment benefits, unlike an employee who resigns.

According to Unédic, 515.000 individual negotiated terminations were signed in 2024. That year, unemployment benefit expenditures related to these terminations reached 9,4 billion euros, or 26% of benefit expenditures.