Unemployment insurance accounts were to return to green in 2021, but the Covid-19 will push them back into the red. Playing its role of shock absorber, the scheme must face both greater expenses (contribution to partial activity, increase in the number of job seekers and therefore of the unemployed to be compensated), but also financial returns at half mast.
Since January, the unemployment insurance balance has deteriorated by 16 billion euros. According to Unédic’s financial forecasts, published Wednesday, October 21, the annual deficit will thus reach 18.7 billion at the end of 2020. It should be 9.7 billion at the end of 2021.
These estimates, made in a climate of uncertainty, do not take into account the possibility of another re-containment. On the other hand, they start from the principle that the reform of unemployment insurance (which tightens in particular the conditions of access), for the moment suspended, will enter into force as planned on 1is January 2021.
Double the debt than expected
“This deficit, of an unprecedented scale in the history of unemployment insurance, would bring the debt to 65.2 billion euros by the end of 2021.” That is nearly twice as much as predicted by pre-crisis projections in February (36.1 billion).
For 2020, more than half (57.2%) of the increase is linked to partial activity. For the scheme, the cost of the latter, which Unédic finances third-party, is 10.2 billion euros. This includes direct funding (8.3 billion euros), but also a shortfall, since the partial activity allowance is not subject to contributions. Before the crisis, Unédic had provided only 500 million euros to finance partial unemployment.
The increase in debt then results from the increase in unemployment benefit expenditure, taking into account emergency measures (up to 28.2%) and declining resources (deferral of contributions, reduction in employment: up to 14.6%).
3.1 million unemployed people receiving benefits
In its projections, Unédic expects the elimination of 670,000 salaried jobs by the end of 2020. The number of compensated job seekers should reach 3.1 million (compared to 2.7 in 2019). It would drop to 2.9 million in 2021.
The government, which has already had to put aside its pension reform, and in brackets that of unemployment insurance, will have to resolve a complex equation with the social partners: find sustainable funding without precariousness even more vulnerable.
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