Despite sluggish growth, Unédic expects a financial surplus in 2022

These are numbers to be taken with a grain of salt. After two long years of pandemic, the accounts of Unédic, the organization in charge of the unemployment insurance scheme, would be positive in 2022 with a surplus of 2.5 billion euros and 3.1 billion in 2023. “The recovery of the accounts from 2020 to 2022 is linked to the end of the emergency measures and the economic rebound in 2021”, declared Christophe Valentie, Managing Director of Unédic, during a press briefing this Wednesday, June 8. After fourteen years of accumulated deficits, the joint organization is recovering, but the war in Ukraine could change the situation.

Indeed, GDP growth fell by 0.2% in the first quarter and most forecasting institutes have significantly downgraded their growth figures for the year 2022. For its part, Unédic is counting on growth of 2 .4% in 2022 against 3.8% last February before the war. Inflation could rise to 4.5% in 2022 before falling back to 2.3% in 2023.

The French economy shaken by inflation and the war in Ukraine

61.1 billion, the colossal debt of Unédic

Unédic’s financial balance had not experienced a surplus since the 2008 crisis. Despite this improvement, the debt exploded to a record level in 2021, at 63.6 billion euros, against 36.8 billion in 2019, and could return to 61.1 billion euros in 2022. It must be said that the shutdown of the French economy during the pandemic and the massive recourse to short-time working have weighed down Unédic’s accounts, even if a significant part (two thirds) of the allowances was paid for by the State.

For partial activity alone, the expenses are estimated at 11.8 billion euros. “The years 2020 and 2021 alone generated 26.8 billion euros of additional debt, due to the financing of Covid measures and the economic slowdown”, indicates the joint body. Statisticians predict a drop in Unédic’s debt of nearly 10 billion euros by the end of 2024. It could stand at 53.7 billion euros.

With regard to debt financing, the representatives of Unédic did not show any sign of concern, despite the tightening of monetary policy by the European Central Bank (ECB). “The big debt issues came at a time when rates were low,” underlined Jean-Eudes Tesson, vice-president of Unédic in front of the journalists.

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Unemployment at 7.3% by the end of 2022 and 7.2% by the end of 2023

The number of unemployed continued to decline at the end of 2021 to stand at 6.2 million (-160,000 compared to the end of 2020). As a result, the unemployment rate as defined by the International Labor Office (ILO) stood at 7.4% of the active population, but it should remain stable this year.

Unédic expects unemployment to be 7.3% by the end of 2022, 7.2% by the end of 2023 and 7% by the end of 2024 On this point, the objective of the full employment announced by Emmanuel Macron, during the presidential campaign, could be difficult to achieve during the first years of office, given the many economic hazards.

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A drop in the number of unemployed people receiving benefits

The other important result of Unédic’s latest financial forecasts is the drop in the number of unemployed people receiving benefits. Indeed, it could increase from 3 million in 2020 to 2.4 million in 2022. “This significant reduction could be explained on the one hand by the good performance of net job creations observed at the start of 2022 and on the other hand by the effects of the regulatory changes that took place at the end of 2021”, say the experts. The improvement in the labor market, following the strong and largely mechanical rebound of the economy in 2021, has enabled thousands of unemployed people to leave unemployment insurance and contribute to the financing of this insurance system via contributions. .

Added to this are the effects of the contested reform of unemployment insurance which came into force at the end of 2021. For the time being, Unédic has not yet done any work on the first repercussions of this measure. It is based on the last impact study dating from July 2021, well before Russia entered the war in Ukraine.

As a reminder, this reform provides for a tightening of the conditions of access to unemployment insurance with an extension of the contribution period for the unemployed, the degression of allowances and a new method of calculating the daily reference wage (SJR). Asked about this sensitive subject of evaluation, the president of Unédic, Patricia Ferrand, assured that work was scheduled. “It’s in Unédic’s roadmap”she said. “The State had announced a reform monitoring committee. So far, no results have been released. she added.

Joint negotiations expected in the fall

Unions and employers’ organizations will have to tackle sensitive joint negotiations by the fall to redefine the rules of unemployment insurance. For its part, the government must send a framework letter to the social partners in June to specify its objectives in terms of compensation for the unemployed. In the context of the war in Ukraine and the slowdown in activity, future trade could be strained if the economic situation does not improve.

In his program, Emmanuel Macron had mentioned a change in the rules of compensation by modulating the unemployment insurance system according to the economic situation. In other words, the worse the employment situation, the more generous the unemployment insurance. On the other hand, it is less so when the labor market is buoyant in order to encourage job seekers to take up the positions offered.

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