Unemployment insurance in the green in 2024 but risks being drained further

Its surplus, still forecast at 5 billion euros last September, would ultimately only be 1,1 billion euros in 2024, before starting to rise again in 2025 (3 billion), 2026 (5,3 billion) and 2027 (11,2 billion), according to these forecasts which count on a restart of growth and job creation from next year.

To finance France Travail (which replaced Pôle emploi on January 1) and France Compétences (vocational training), the Social Security financing law adopted in December provides for less compensation by the State for exemptions from insurance contributions unemployment. Revenues had already been reduced by 2 billion euros in 2023.

The financial loss induced by this budgetary measure will be 2,6 billion euros in 2024, 3,35 billion in 2025 and 4,1 billion in 2026: or 12,05 billion over four years, recalls Unédic, which underlines that this “clearly slows down the reduction in unemployment insurance debt”.

As a result, “the debt would be 38,6 billion euros at the end of 2027” while “it would have been 25,5 billion without these levies”, specifies the organization.

“We took a big blow to the head. But Unédic, even by resorting to borrowing, maintains its capacity to ensure its solvency,” assured Medef representative Jean-Pierre during a press conference. Eudes Tesson, who took over as president of Unédic for two years at the end of January.

He judged that the situation remained satisfactory “if we compare to previous Covid and pre-Covid years”.

During the pandemic, unemployment insurance saw its debt explode, to 63,6 billion euros in 2021, including the coverage of emergency measures such as partial unemployment (for 18,4 billion).

Finance France Travail

Today, Unédic is generating a surplus linked to the improvement in the labor market and the reforms to the compensation system introduced in 2021 and 2023, which reduced its expenses by 23,2 billion euros. Another reduction: 1,9 billion euros linked to job abandonment, which no longer gives rise to the right to compensation.

Unemployment insurance also anticipates further savings when the shortening of the duration of compensation for jobseekers reaches its full effect from 2025.

“Without the levies (from the State), we should not have borrowed,” lamented the vice-president of Unédic, Patricia Ferrand (CFDT).

And with debt interest, the cost of slowing down debt reduction between now and 2027 will total nearly a billion euros, added Unédic CEO Christophe Valentie.

In addition, the government has just announced additional saving measures worth ten billion euros starting this year. According to Jean-Eudes Tesson, "we can therefore expect" that Bercy will impose an increase in the rate of revenue (currently 11%) that Unédic must devote to financing France Travail -- this year, these 11% will represent nearly 5 billion euros.

The rate of 11% "comes under the unemployment insurance agreement" and could only be exceeded with the agreement of the social partners, or if the government regains control of the joint system, noted for her part Patricia Ferrand.

Unédic's financial forecasts, based on a consensus of economists, expect GDP growth of 0,7% in 2024 and 1,3% from 2025 to 2027.

If growth reaches 1% this year as projected by the government, the organization's accounts would be significantly improved.

And “from 2025, the ramp-up of reforms and above all a more favorable economic situation would reduce the number of unemployed people receiving compensation to 2,4 million in 2027”, compared to some 2,6 million at the end of 2023, Unédic anticipates.