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Job retention schemes during the COVID-19 lockdown and beyond - the case of France

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Präsentation von Adrien Perret im Rahmen eines Webinars vom OECD Berlin Centre am 26. November 2020.

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Job retention schemes during the COVID-19 lockdown and beyond - the case of France

  1. 1. NOVEMBER 26TH, /2020 Job retention schemes during the COVID-19 lockdown and beyond the case of France Adrien Perret Deputy Director for Social Policy and Employment French Treasury Ministry for the Economy, Finance and the Recovery 1 Direction générale du Trésor
  2. 2. 221/10/2020 Direction générale du Trésor 1. The French scheme of Activité partielle 2. Sectoral reallocation and training during short-time work Outline
  3. 3. 3 Direction générale du Trésor Significant job losses, though far below the magnitude of the economic shock Quarterly change in employment and GDP Source: Insee
  4. 4. 4 Short-time work as a massive support Direction générale du Trésor Weekly short-time work incidence (% of workers)• One of the most generous schemes in Europe: public funding of the full employees’ compensation (70 % of gross hourly wage, up to a ceiling of 4.5 hourly minimum wage) • March - September : 16.7 million employees concerned by a prior approval of the short-time work scheme • As of the end of November, 1.9 bn hours have been compensated over the months March to September, at a cost of €20.1 billion. Source: Insee, Labour Force Survey
  5. 5. The French short-time work scheme over 2020 5 Before Covid Covid period New general scheme as from 2021 Jan 1st Long-duration scheme as from July 1stUntil June 1st From June 1st to December 31st Compensation of employees (% of gross wage) 70% (100% at min wage) 70% (100% at min wage) 70% (100% at min wage) 60% (90% at min wage) 70% (100% at min wage) Public compensation (% of gross wage) Lump-sum (7.74€/h for SMEs, 7.23€/h otherwise) 70% up to 4.5 min wage (100% at min wage) 60% up to 4.5 min wage (100% at min wage) 36% up to 4.5 min wage (90% at min wage) 60% up to 4.5 min wage (90% at min wage) Length 6 months renewable up to 1 year 3 months 7 months 3 months renewable up to 6 months 6 months renewable up to 2 years Training costs No 100% covered 100% covered 70% covered 80% covered Conditions Workers concerned not laid off Workers concerned not laid off Workers concerned not laid off Idem + quarterly information of social partners Firm-level agreement, max 40% reduction in hours worked (per worker)
  6. 6. 6 Experience of the 2009 Great Recession • France: Cahuc et al. (2018) • Italy: Giupponi & Landais (2018) • Switzerland: Kopp & Siegenthaler (2019).  large, positive effects on employment and on firm survival  strong effects on liquidity-constrained firms that face a temporary demand or productivity shocks Risk of zombification? Giupponi and Landais (2018): despite short-time work having targeted predominantly low- productivity firms, zombie effects are small. Furthermore: Covid is a pure exogenous shock (unlike the 2009 debt crisis)  Protect incomes and job matches in order to prepare recovery Why such a massive reliance on short-time work? Direction générale du Trésor
  7. 7. 7 More than 3bn€ for workers and the unemployed in order to boost job reallocation and skills: • Fund training during short-time work thanks to the national training fund • Bonuses on the individual training accounts against training in specific occupations/areas • Encouraging occupational changes by enabling switches through on-the-job trainings • Enhancing digitalization of the life-long training market in France  create educational content platforms for trainings organizations,  offer 30,000 distance training courses. The challenge of job reallocation & upskilling Direction générale du Trésor
  8. 8. 8 The challenge of job reallocation during STW Direction générale du Trésor The national training fund scheme (FNE-Formation) • dedicated to training employees placed in short- time work (activité partielle) • financed by the government • help facilitate the continuity of employees' activity and to encourage their adaptation to new jobs in the event of professional changes. “Collective transitions” (Transitions collectives) • new training program to enable employees whose jobs are under threat to retrain for a job within a sector with a strong growth potential locally • part of the national training fund • will be built around territorial platforms of professional transition where will be brought together companies with employees to be reallocated and companies with recruitment needs. > 300 employees 300 to 1,000 employees < 1,000 employees Coverage (salary & training cost) 100 % 75 % 40 %
  9. 9. 9 The challenge of job reallocation during STW Direction générale du Trésor Training for employees in short-time work (% of employees) Source : Dares, Ministry of Labour In September 2020: • Training for employees in short-time work is more common in large companies; 21% in companies with more than 500 employees versus 11% in companies with 10 to 19 employees. • Training for employees in short-time work is more common in manufacturing transportation equipment (57%) and in information and communication (46%), • Conversely, it is particularly low in Financial activities, real estate activities, or construction. Source : Dares, Ministry of Labour
  10. 10. 10 Cahuc, P, F Kramarz and S Nevoux (2018), “When short-time work works”, CEPR Discussion Paper 13041. Giupponi, G, and C Landais (2018), “Subsidizing labor hoarding in recessions: The employment and welfare effects of short-time work”, CEPR Discussion Paper 13310. Kopp, D, and M Siegenthaler (2019), “Short-time work and unemployment in and after the Great Recession”, KOF Swiss Economic Institute Working Paper 462. Dares (2018), Changer de métier : quelles personnes et quels emplois sont concernés ? References Direction générale du Trésor

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