The Fight to Balance France’s Budget: Addressing Unemployment and Social Spending through Reforms and Cost Reduction Measures

Government unity on work and unemployment insurance led by Gabriel Attal

The government is facing a significant deficit in the budget and has held a seminar similar to a Council of Ministers meeting to discuss ways to address it. Social spending, such as unemployment insurance, is a target for savings. The Prime Minister stated that the government will prioritize rigor and responsibility with a focus on work, as more employed French people will help balance finances. The seminar will include discussions on encouraging people to return to work through reforms and addressing issues like de-employment, low wages, and new forms of work.

After reaching 5.5% of GDP in 2023 according to INSEE, France’s public deficit requires significant cuts. The government plans to make at least 10 billion euros in cuts in mid-February on the 2024 budget and anticipates additional savings of at least 20 billion euros in the 2025 budget. Various avenues are being explored to boost employment and save money, including a new unemployment insurance reform that unions are contesting.

One proposal being discussed is reducing the duration of compensation for the unemployed, with the argument that structural reforms are necessary for full employment. This proposal may take at least a year before having an impact on public accounts. The government is looking for financial margins in the employment sector where few currently exist.

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The Prime Minister has stated that the government will prioritize rigor and responsibility with a focus on work as more employed French people will help balance finances. In order to achieve this goal, social spending like unemployment insurance must be addressed as part of efforts to reduce the deficit.

At present, France’s public deficit stands at 5.5% of GDP according to INSEE and requires significant cuts to address it effectively.

To mitigate this issue further down the line, additional savings will be necessary in both the current year’s budget (estimated at “at least 20 billion” euros) and those following years (estimated upwards of “at least 10 billion” euros).

The government is considering several avenues for employment creation and cost reduction measures such as new unemployment insurance reform proposals that unions have contested.

One key proposal being discussed is reducing unemployment benefits by shortening their duration.

This measure aims at achieving full employment but may take upwards of one year before having an impact on public accounts.

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