French unions and employers, grappling with a €400 million savings target in unemployment insurance by 2025, are meeting resistance as they explore controversial cuts affecting cross-border workers and consider reduced benefit levels under new guidelines.

The French government has tasked unions and employers with finding €400 million in additional unemployment insurance savings by 2025, but they have already flagged challenges in reaching this target. Meeting for their second day of negotiations, representatives acknowledged the difficulty of reaching such ambitious targets quickly.

To meet the deadline for an agreement by mid-November, negotiators will revisit the framework from the November 2023 unemployment agreement. However, after a presentation from UNEDIC, the agency overseeing unemployment insurance, attendees highlighted the challenge of generating "massive savings" within a single year.

What could await cross-border workers?

One proposal discussed by the Movement of the Enterprises of France – MEDEF in short – negotiator Hubert Mongon suggests cross-border workers might have to accept lower-paying jobs in France to retain benefits. Currently, these workers can turn down positions in France that do not match the salaries of jobs in Luxembourg. Under potential new guidelines, cross-border workers could thus lose their benefits if they refuse jobs that pay less than their prior international roles.

Another cost-saving suggestion would reduce benefits for cross-border workers by adjusting for the difference in the cost of living. Cross-border workers generally receive higher unemployment benefits than domestic workers, averaging €1,781 monthly in 2023 compared to €1,265 for those who only worked within France.

MEDEF has also asked UNEDIC to look into additional ways to cut costs, pointing out that Luxembourg only reimburses three months of unemployment for cross-border workers – a significantly lower contribution than other countries, which makes the system costly for France. In 2023, France's unemployment benefits for around 77,000 former cross-border workers cost about €800 million, with €137.1 million allocated to those who previously worked in Luxembourg.

However, changing these rules would require new agreements with neighbouring countries.

RTL

© Jean-Marc Barrere / Hans Lucas / Hans Lucas via AFP

Cross-border workers 'overly convenient target'

While some, like French Democratic Confederation of Labour (CFDT) negotiator Olivier Guivarch, agree that cross-border workers may be a potential area for cuts, he remains doubtful the proposed reductions will meet the government's target. The General Confederation of Labour's (CGT) Denis Gravouil criticised the plan, calling cross-border workers "an overly convenient target", while the French Confederation of Christian Workers (CFTC) also opposed any benefit cuts based on a reducing coefficient.

Guivarch noted that the government's request came informally via letter rather than through a formal directive. He observed that the current government may lack the strength to push such policies through compared to last year’s administration under former Prime Minister Elisabeth Borne, which had previously threatened to tighten unemployment benefit conditions through the 'Attal decree'.