French Social policy
The Post-War settlement was particularly important in France, in the field of social policy as in many others. Resistance to Nazism, and the exhilaration following the liberation of the country set off a wave of idealism which swept all institutions. The key-note of the time was beyond doubt, the quest for a new power relationship between social groups, an issue whose political connections were very strong. The privileged social groups and conservative political forces which had collaborated with the Occupiers were discredited for some time, and had to keep a low profile. The working class was expected to play a more important part in the running of the country than ever, as well as obtain a greater share of the national income. Social security would therefore be administered by institutions dominated by the Unions, from I945 to I967. This was preferred to State control, which, it was feared could easily spawn a clumsy, unresponsive bureaucracy. Welfare provision was, from the start, seen as an indirect wage, supplementing the direct ones: it would be, after all, financed by contributions paid by firms and by employees, not by taxation. The proportion of the contributions paid by firms was originally greater, and fell significantly afterwards. The connection between social security, industrial relations and employment issues remains extremely strong, to this day, in administrative as well as in political terms. Welfare is still a highly sensitive area, and is closely related to the balance of forces between social categories, an issue with immediate political implications in France.
Besides, in I945, the prestige and symbolical influence of war time Britain were great, in spite of General De Gaulle’s personal feud with the “anglo-saxons”, since the Free French, who were now ruling the country, had been based in London, where they had enthusiastically studied the Beveridge Report. This explains why the existing French institutions and habits in the field of social security, organized so far on mostly bismarckian lines, were suddenly supplemented with new ones, tailored on the beveridgian model, thus flying in the face of all the theoretical constructions based on “path dependency”. The current complexity of the French system is largely due to the contradictory influences of B & B – Beveridge and Bismarck. The Plan Laroque, the blue print for the French welfare system, was expected to provide universal protection to the working population, thanks to a universal scheme. In practice, neither its coverage nor its organization were universal. The principle of universalism run counter with the bismarckian insistance on occupation remaining the basis for identification. People who could not be considered as having an occupation or being related to someone who did remained in need of assistance, outside the main stream of “social insurance”. Besides, needs remained separate and were dealt with by different funds: family policy, health coverage, and pensions were from the start administered separately. The quality of coverage also varied, and sometimes was not universal at all. The self employed, except those working on the land, had no coverage against accidents in the workplace, for example. In health care, patients did have to pay a significant charge, supposed to discourage them from going to the doctor’s without any real cause. However, the most serious breach in the principle of universalism was a sociological one. From the start, a number of social groups refused their integration within the national social security fund, and retained their own funds. Associating with the wage earning classes was not an attractive prospect for the self employed, for farmers, and for a very special category, whose political construction is unparalleled in other countries : the “cadres”, a motley group of administrative, supervisory, technical and managerial staff. A number of trades which had, before the war, obtained advantageous welfare schemes, such as miners and railwaymen, retained them, since their coverage was superior to the basic one guaranteed by the post war schemes.
The provision obtained in the name of universalist schemes remained fairly modest: basic pensions were low, the fees for health care remained significant, benefits for disability and in case of death were also unsatisfactory. Simultaneously, the middle classes expressed the wish to obtain different treatment from the working classes, and exerted pressure for supplementary, voluntary schemes to be created and supported. After a bitter dispute, in I947, the “cadres “ obtained the right to supplementary, more generous pensions. The working class followed suit. In I972, the “supplementary” pensions became compulsory for all. In the field of health care, mutual insurance companies provided a “supplementary coverage” which also became practically compulsory. The “prescription charge”, called the “ticket modérateur” which was supposed to help keep costs under control, by leaving part of the cost on the citizens’ shoulders, became merely used to shift the cost of health care away from the State and employers. It certainly never acted as a brake on expenditure, which went on escalating, since no mechanism was ever created to check the increase. The combination of basic universal provision and supplementary provision (which cannot really be considered as optional) led to a high degree of popular satisfaction and helped the country achieve high standards of care. The professional cultures and loyalties of the public institutions and of the mutual insurance companies increasingly diverged from that point
The one non controversial area, in social policy, was family policy. This is an old tradition in France, going back to the 19th century. France was then concerned about its lagging demography, in a context in which the European nation-states vied with each other. This combined with religious factors, as well as cultural and social conservatism. The collaborationist Petain regime itself made abortion a criminal offence and encouraged motherhood. After 1945, family policy became simultaneously a generous anti-poverty measure, and a way of boosting the French birth rate, thus enjoying the support of both Left and Right. It was not redistributive, but compensated families for the cost of children.
Throughout the I950’s, this system was consolidated. The Cold War had a significant impact, in the sense that it led to a political split in the Trade Union movement, in I948. Politics seemed to be more important than class affiliations, and minority unions combined with employers’ representatives in order to wrench control of the social security funds from the Communist led majority union, the CGT. In practice, the management of the welfare system could in no way be considered as democratic, or as truly representative , and the social ambitions of the Resistance quickly floundered, leading to a lot of popular cynicism. However, significant progress was achieved in the field of unemployment relief, which had been neglected in the immediate aftermath of the war. The old conservative approach, according to which unemployment relief inherently encouraged laziness and distorted the labour market was no longer accepted. In the heyday of Keynesian demand management, preserving the purchasing power of the unemployed seemed a priority. In the wake of the creation of the Common Market, great hopes were pinned on labour mobility, which good unemployment relief was expected to facilitate. The government exerted pressure on employers and employees, who, in I958, eventually agreed to jointly create and manage institutions granting unemployment relief – but which kept aloof from retraining, streaming or any other interference with the “labour market”. Significantly, the national institutions created to that effect were, and still are, voluntary organizations , which makes their financial control rather difficult. Education became a real priority for governments, and the system expanded steadfastly: secondary education was provided for the whole population until the age of 16, and the numbers in higher education started expanding then.
As in other developed countries, universalism was unable to meet the need of the really poor section of the population: assistance had to be provided, as of right, especially after the campaigns mounted by charitable voluntary organizations in I953. By the late 50’s, most of the slums had been destroyed, but solving the housing shortage took longer that expected, especially after the return of French populations from Algeria in I962.
In the I960’s, two types of evolutions took place. The sociology of France changed, and some of the categories which had adamantly refused identification with the “wage earners” in 1945 saw their numbers dwindle: the self employed and farmers in particular included a large proportion of pensioners, and their funds had to be subsidized by the “general fund”, i.e. ordinary wage earners. The deficit of the social security budget started at that time and was a consequence of this demographic evolution. France had become a modern nation, in which the vast majority of the population was now earning a wage, as part of a complex organization.
Politically, De Gaulle was back in office, and France was under the control of conservative modernizers, who quickly abolished the last pretences of post war “industrial democracy” in the field of welfare, and put an end to the domination of the funds by trade unions: from I967, employers and the unions had to share power on an equal basis, a situation which , given the persistent divisions among the trade unions induced by the cold war, ensured the systematic domination of majorities excluding the hard left. The price for this was a degree of secrecy and power trading among fund managers, a situation which estranged them even further from ordinary people. From a financial point of view, the government was less successful. The several funds were , in theory, strictly separated into four branches, on a functional basis: health, pensions, family and contribution collection. In practice, this proved unwieldly and unpracticable, and moneys often had to be shifted from one fund to the other..
The I960’s were a time of rapid modernization, evidence of which could be found in the rise in the number of university students, in the growing urbanization of the country, and in the construction of poverty as a residual issue, similar to frictional unemployment. The State was trusted by government and opposition alike, as the chief agent for social change, irrespective of political disagreements on the direction of the change. Had not De Gaulle himself said that planning was a “burning obligation” ?
The ideological climate changed in the I970’s. On the one hand, the I968 social crisis opened the lock gates and was followed by a spate of negotiations, held at national level under the aegis of the government, leading to a series of improvements on the status of workers. This certainly was very significant, and helped the French economy accept the increasing pressure exerted by the incipient crisis of the fordist model. Conversely, social exclusion hit an increasing number of people, left in the cold by the dual labour market: poverty was rediscovered at this juncture, and some dissatisfaction with the institutional arrangements was expressed. The solution advocated by experts was the local treatment of poverty and the coordination of inclusive social policies at a micro level. The large welfare institutions sailed through the period, providing good care at a permanently increasing cost, under the dual pressure of patients, on the one hand and the unchecked medical profession and health business on the other hand. They were quietly if not necessarily prudently managed, and were no longer perceived as agencies for the democratisation of society, but taken for granted and seen as vast, more or less efficient bureaucracies. More expenditure just meant more resources would have to be found. The social security contributions paid by employees increased significantly, from 17% to 44% of the total. The still improving living standards offset this evolution. The original distinction between “insurance” and “assistance” became blurred, as everyone in employment automatically contributed, and had no control over the amount of their contribution. Besides, some of the recipients of benefits did not contribute.
Expert opinion started shifting, among economists and public financial institutions, event though this was not reflected in government policies until, ironically, the victory of the Socialist Party in 1981. The Keynesian paradigm was still central to liberal Prime Minister Raymond Barre’s reflationary programme in the late I970’s and to François Mitterrand’s pre election discourses in 1981. The neo liberals, whose growing influence was symbolized by Jacques Delors ‘s austerity package in I982, had for some time been advocating supply side economics as well as a containment of public expenditure. The cost of labour was singled out as one of the relative weaknesses of the French economy, especially compared to that of the USA. Since social security contributions added to the labour costs for employers and reduced the direct income of employees, they were found particularly problematic, in a context of growing unemployment. However, there was little enthusiasm for shifting the financing of the welfare funds unto the Treasury, and the tax payer. The combined weight of tax and social security contributions did increase, from 1975 to 1995, from 35% of GDP to 45 %. The overall budget of the “Sécurité Sociale” overtook that of the government, reaching, by 1994, 2 700 billion FF (or 412 billion Euros), against 1 500 billion FF (or 229 billion Euros). Such problems combined with antibureaucratic criticisms, expressed by the liberal wing of the left, to create a climate of opinion in which the welfare system came to be seen as an untractable problem and a burden. However, it might be the case that such criticisms were mostly to be found among experts. At a popular level, welfare was seen as one of the natural rights, obtained after I945.
Throughout the I980’s, in a context of mass unemployment, and of the collapse of the old industrial economy, the governments had three goals: they attempted to keep the escalating welfare costs under control , by limiting provision and cutting benefits, to avoid the rise of poverty, and to restore the political status of the welfare funds in the eyes of the public. The latter policy was a total failure. The representatives of employees were once again given a majority of seats among the management of the funds, but, in I983, the elections organized to select them had an extremely low turn out. The following elections, due to take place in I989, had to be cancelled, since the participation rate would have been even more disastrous. The old myth of the “self government of labour” had vanished, and welfare was clearly seen as one government function among others – a hot potato it would have happily passed along.
Cost cutting was relatively more successful, especially in the field of unemployment benefits. This was compounded by an increase in contributions, the abolition of the ceiling for some contributions , the extension of contributions to the unemployed and pensioners. However, the overall policy consisted in cushioning the impact of the economic changes upon the population. Contrary to the situation in Mrs Thatcher’s Britain, de-industrialization was not welcomed or encouraged, economic history was never seen as a natural phenomenon or the market revered as an implacable deity. Early retirement, normally at 55, but sometimes at the age of 52, became a widely used tool in industrial restructuring. By I984, 700 000 people were taking advantage of this. In I990, the activity rate of men aged 55 to 64 was 45% in France, against 68% in the UK, 67% in the US, 57% in Germany (Marie Therese Join Lambert p230). This policy was accepted by both sides of industry, and by society at large. It was heavily subsidized by the government and advantageous for firms, offered pensioners a good deal and was gradually linked to the compulsory hiring of first time workers. As a job creating strategy, this was preferred by unions to job sharing or part time work , which remained unpopular.
In I988, following an official report by the leader of a NGO, the Minimum Income for Social Integration (Revenu Minimum d’Insertion) was adopted by Parliament, which guaranteed a basic income to the whole population, irrespective of previous contributions. This topped up existing benefits, up to a certain threshold, which varied according to the person’s family circumstances. The long term unemployed, whose benefits had dwindled, were one of the expected categories of recipients . In theory, claimants were supposed to sign a “contract for social integration” which included, on their part, serious efforts such as retraining, joining literacy classes, or work placement. In practice, the monitoring of claimants and the creation of “integration schemes” proved an impossible task, and the proportion of people actually benefiting from such measures rarely exceeded 25% of the total. Integration was supposed to take place in local communities, but many welfare institutions were entrusted with the granting of the RMI, even when this was not their original function and field of expertise, the family benefits offices being a case in point. In spite of its chaotic management , the RMI became a central element in French assistance policy, and might have spared the country a major social upheaval or political adventure in the I990’s. The total number of recipients was 994 000 in I996, which meant that 1 900 000 persons depended on the RMI for their living. It might be the case that the French population would not have peacefully accepted a situation of inequality and exclusion comparable to that of the UK, where 12 million people lived under the poverty line. This feeling probably played a part in government decision making, and the low profile kept by the Conservative opposition on the issue.
Among the innovations introduced by socialist governments, the method of financing is probably the most significant one: A new contribution was invented, which is really similar to a tax, called the Contribution Sociale Généralisée (CSG). From 1991, this was levied on all incomes, including return on investment, rents and pensions. Contrary to social security contributions, it was not solely based on wages, and could therefore not be criticized for “pricing workers out of a job”. . It was not progressive (its rate, from I997, has been 3,4%), but was not ceilinged either, which amounted to a fair social compromise . The major difference with taxation, lied in the fact it had to be spent exclusively on financing the welfare system.
By the mid I990’s, the perception of French experts had changed very rapidly, under the influence of neo liberalism . The economic aspects of welfare, its increasing cost, had become more important in their eyes than the social and political ones, which is probably one of the reasons for the mismanagement of the issue, under Alain Juppé’s government, in December I995. The lack of popular interest in the management of the funds in the I980’s was misinterpreted, as a lack of concern for the quality of provision. Trade Union leaderships, who felt threatened by the reforms, were able to turn the table in their favour and to mobilize millions of demonstrators against the government’s plans. Besides, short term factors also influenced public opinion, such as the gap between the concern presidential candidate Jacques Chirac had displayed towards the poor in spring, and his government’s turn to financial orthodoxy in October. The attempt at unifying the funds, and reducing provision for some privileged categories, was interpreted by public opinion as the thin end of a wedge , which would eventually lead to a general scaling down of provision. Besides, the concern for the “age pyramid” displayed by the government, a favourite topic for journalists, turned this into a public issue and helped convince potential pensioners that their pensions were seriously under threat. The Juppé plan had been heralded as a major overhaul of the system, and was perceived as such. The fears of different categories – doctors, bent on preserving their professional autonomy and incomes, future pensioners, claimants, patients belonging to different social groups , trade union leaderships - coalesced. Prime Minister Juppé’s attempt at making Parliament responsible for the health system’s yearly budget was construed as the “rationing” of care. Cost cutting would have to be implemented through negotiation with the medical profession, and was, in practice, ineffective, especially after a ruling by France’s constitutional authorities making the mandatory mechanism for the capping of expenditure illegal .
The political cost of the operation, for President Chirac, was the return of a socialist majority in I997, and the creation of a de facto two headed executive, a rather uncomfortable situation when the two heads belong to different political traditions. Industrial relations dominated the social policy debates from the start. The government had pledged itself to reduce the number of the unemployed through a reduction in the legal working week, from 39 to 35 hours. This combined with an attempt at putting French industrial culture in line with continental Europe, ie at encouraging social partners to negotiate over a wide range of issues rather than embark on conflicts as a precondition for negotiation. The law encouraged firms to negotiate over the reduction of the working week, and the state provided financial incentives for those whose reached an agreement . After a while, the 35 hour week would be mandatory, and no bonus would be included. Negotiations did take place, locally, and even in large public sector institutions, such as the post office, which had not originally been included in the scheme, proving that the issue did strike a chord. In many cases, the discussions enabled French firms to introduce a degree of internal flexibility in the organization of labour, which would not have been possible otherwise. The 35 hour week led to a an increase in leisure time and a change in people’s personal lives, as well as to an increase in the pace of work and degree of control exerted by firms during work time, which helped cushion its impact on productivity. The rate of unemployment fell significantly, for a variety of reasons, including the successful modernization of the French economy, so in spite of the difficulties, the 35 hour week was perceived, at popular level, as a partial success.
French employers, however, attempted to wrench the political initiative back from the government, changed their leadership, and started adopting a confrontational strategy over the issue of the management of social policy, and their contribution to the unemployment, and supplementary pensions funds. This is approached in a very global way, called “refondation sociale” and is presented as amounting to a new settlement, whose historical significance would dwarf all reforms since the creation of the Sécurité Sociale. Reform seems to be possible in a number of areas, such as the providing of more satisfactory unemployment benefits for those workers who undergo real retraining. This proposal, influenced by the Lisbon European Union summit, and the emphasis on “employability” , was refused by some Unions, but accepted by others and partly by the government. It is also made realistic by the rapid fall in the unemployment rate, the increasing popular confidence in the future, and the change in mentalities. Other controversial issues, such as the switching of funds from their original use to other types of uses – still within social policy- were met with popular indifference. The issue of pensions, however, is fraught with considerable danger. The solutions advocated by employers , such as raising the age of retirement, or scaling down provision, seem to be in contradiction with the historical and cultural trends since I945, such as the gradual expansion of the private sphere in people’s lives, and unjustified in a prosperous economy. The concept of “paritarisme”, the joint management of welfare funds by employers’ and employees’ representatives, might have been ideologically overloaded in the case of France. It was partly inspired by the “continental corporatist” tradition, but, in practice, closely reflected the changing power relationship between social partners. This issue was also closely linked to national politics, in which the Left/Right debates bear a complex but real relationship with industrial relations. In the French tradition, disputes are eventually settled in the political arena, in some cases after a theatrical display of ideological fireworks, often misinterpreted by foreigners as an ominous sign of impending crisis. In fact, this is just the local way of conducting social negotiations.
Global overhauls of social security systems have only happened so far in exceptional circumstances, such as wars or the post war periods of social reconstruction. The French system is now in the political limelight, and is undergoing a number of changes, but whether it will be significantly modified in the near future remains an open question.
The Welfare system in France today.
Understanding the French welfare system requires an agreement on what we mean by “welfare”. The French would not include education, which is a strategic public policy in its own right and enjoys a very high status. On the other hand, areas such as family policy or employment are considered as part of “social protection”, because of the specific ways in which policy was construed in the past.
Health indicators are usually considered as only moderately satisfactory by French experts. The life expectancy of French females is the highest in Europe (81.9) , but that of males is just below the European average (74) (DRESS, 2000). Important regional variations exist, the life expectancy of the agricultural South West being higher than that of the industrial North, a difference which might also be linked to cultural factors, especially diets. Significant inequalities are also to be found between social classes. Among OECD countries, France ranks n°10 in terms of infant mortality, (Join Lambert p.535) which stands in stark contrast with the country’s ranking in terms of expenditure – 9.8 % of GDP is devoted to health expenditure, making France one of the world’s largest spenders, after the USA (14%), Germany (10.5%) and Switzerland (10.2%) (DRESS, p.193) . The cost effectiveness of the system is therefore debatable.
France operates a quasi market, as far as primary care is concerned, but also for specialist consultants, and clinics, in spite of the existence of state of the art public hospitals. This also applies to dispensing chemists, and explains the record braking consumption of certain types of medicines by the French . Patients were originally expected to pay for their medical care, and were refunded afterwards by the Health fund (“Sécurité Sociale”), minus a prescription charge. In practice, mutual insurance companies now pay chemists and doctors directly, and patients only pay a nominal amount. Demand and supply are both unlimited, and no check is applied by the authorities to the number of doctors, since the profession is “self regulating”. The number of doctors varies widely, according to the attractiveness of areas, between 768 GPs for 100 000 inhabitants in the Paris area, to 175 for 100 000 in rural regions (DRESS p.138). The capping of prescriptions seems an impossible task, and the medical profession has so far successfully resisted the use of computers for processing prescriptions, which would enable monitoring, and possibly the imposition of statutory limits at a later stage. Data processing is still done by hand by the health funds, a clumsy and costly method. Separate negotiations, leading to mutually acceptable but binding agreements have led to compromises between GPs and the Health funds on the one hand, specialists on the other hand. However, this process is uneven, and has led to legal difficulties.
Hospitals are either public (328 500 beds in I997) or private (180 000 beds, 60% of which are in profit making establishments(Dress p144). Over the years, the number of available beds as well as the overall level of expenditure have been found excessive. Demand fell, as the result of changes in medical practice such as the shortening of hospital stays. The introduction of global budgets and of spending limits in public hospitals has somewhat tipped the balance in favour of the private sector, which used to be less advanced technologically. Nurses and doctors in the public sector have borne the brunt of the cuts, which have had a demoralizing effect. Regional agencies were created in 1996, in order to coordinate the supply of hospital provision in the public and private sectors ; They wield significant financial powers, and can use this to rationalize supply.
The French health system offers standards of care which are among the most satisfactory ones in the world. Any reform is expected to maintain this, as well as to enable the nation to exert a degree of control over costs, and guarantee a fairer distribution of care. This parameter is to be added to the clout of other groups: the influence of professionals and of the health business lobby, that of mutual or private insurance companies, and of the social partners involved in the management of the funds.
Family policy is run by 125 Caisses d’Allocations Familliales, organized on the basis of the “département”, a small , traditional regional entity. They are managed by employers and employees representatives. Family benefits are non contributory, and are not means tested. They are distributed on a uniform basis, and are still under the influence of pro natalist policies, since they are very progressive: the monthly benefit for one child is 15 ff (or 2.3 euros), but 678 (105 euros)FF for two children, 1535 FF (234 euros) for three, 2398FF(366 euros) for four. They are clearly part of a policy which is openly described as social engineering. The nationalistic motivations have been replaced by economic arguments. The lagging demography of France is presented as a time bomb which might one day lead to a fall in pension rates. This rather illiberal interference of the state with personal choices is all the more surprising since the separation between the public and the private spheres is seen as a capital tenet of French democracy. Attempts at targeting family benefits towards the needy were made in I998, but the proposals were quickly withdrawn, in the face of fierce opposition from both the universalist Left and the traditionalist Right. Yet, there is no evidence connecting family benefits with the birth rate, a complex variable resulting from still mysterious and unpredictable parameters. The number of large families has significantly fallen since the I960’s. The family benefits are not the only element of family policy, which also includes means tested benefits on the one hand and tax allowances on the other hand. The latter are fairly generous, and benefit middle class families: the income of a family is divided into “tax units”, the first two children counting for half a unit each, the third child, and any child over that number counting for a whole unit (ie, a family with four children will have 5 units). The tax return is calculated on the basis of units, and the global income is divided into as many parts as there are units, thus significantly reducing the taxation of large families with good incomes. The means tested benefits are numerous, and concern housing, an area in which they are particularly significant, as well as the needs of young children and those of single parent families. Targeted benefits also reach the poor indirectly, through the subsidizing of “action sociale”, a set of policies often channelled through voluntary bodies or local authorities. The impact of family policy on gender relations is ambiguous. On the one hand, some policies have improved the autonomy and professional integration of mothers. This is the case of the single parents’ benefit, a fairly generous benefit, which existed long before the Minimun Income for social integration (RMI) was invented, but also of all the different provisions for the care of infants , which facilitate women’s work. This should be connected to the existence of “ecoles maternelles” , publicly maintained and free state schools which accept children from the age of 3, and sometimes younger. Conversely, the “Allocation parentale d’education” encourages the mothers of large families to abandon their careers and stay at home to look after their children. The impact of public policies on women’s activity rate seems to be significant. 89% of single mothers are employed – against 84% of married women(DRESS 203). Mothers of three children who have worked for 15 years can retire on a full pension, a move which was very much criticized on the grounds that it sought to exclude women from careers . The French ideal is not to offer women a choice between family life and a career, but to help them conduct both. Policies that are advantageous for some women, such as APE and early retirement for mothers are not necessarily conducive to greater equality.
When the RMI was invented, the CAF were entrusted with its management and distribution, because they had a national network of social workers. This somewhat overburdened them with new responsibilities, largely unrelated to family issues.
Pensions in France were created as early as the 17th century in the merchant marine, to compensate seamen for the harshness of their trade, and persuade them to stay with their employer. This paternalistic, corporatist approach remained influential when a modern system of pensions was gradually developed in the early 20th century. From I945, France has, like most other European countries, developed a two tier system, in the private sector: a basic pension, and a supplementary one, which is also compulsory. Both are run on a “Pay as you go “ basis, called “repartition”, in which contributions are used to pay for pensions , NOT invested or saved for tomorrow’s pensioners. On top of this, a number of small voluntary schemes exist, sometimes in the form of pension funds.
People who have not been in employment, or who have not acquired a right to a pension in a any way, are eligible to a benefit.
The basic pension is not flat rate, but linked to a person’s previous earnings. Retirement age is 60. The previous earnings are calculated on the basis of the best 10 years of a person’s career. This is being changed, and increased to the best 25 years. The maximum rate is 50%, provided the pensioner has worked for 40 years.
The supplementary pensions, jointly managed by employers’ and employees’ representatives, are subject to close financial scrutiny by the State. They are not linked to a particular firm of even branch, but are calculated and managed on a national basis. The rate is therefore uniform, and also proportional to a person’s previous earnings, and length of career. The combined basic pension and supplementary pensions usually guarantee a pension worth slightly less than 70% of the previous wage, for a whole life time in employment.
In the public sector, pensions are paid by the state, not run by specific organizations. The retirement age is also 60. Maximum pensions represent 75% of a person’s last wage, and require at least 37,5 years of service. Pensions do not take into account bonuses, which, in some government departments, are quite significant.
A number of special cases also exist, among railwaymen, miners, electricity and gas workers. Their schemes are more advantageous,, but since the numbers of working contributors is falling rapidly, they have to be subsidized by other funds, which creates a number of difficulties.
The government faces three types of problems: the need to rationalize and unify funds,
the financing of supplementary pensions in the private sector, linked to the growing imbalance between the number of contributors and of pensioners, and the absence of pension funds. The latter problem is related to the demographic issue, and to changes in the pattern of employment, which make “Pay as you go” problematic, but also has a strictly financial aspect. France does not have the equivalent of the British and American pension funds, which accumulate contributions over a full working life, and are in a position to invest gigantic amounts on financial markets. According to some sources, a large proportion of French shares (1/3rd) are controlled by foreign pension funds, without any kind of reciprocity. This is a major worry for French leaders. Pension funds are therefore a divisive issue, since interest for financial speculation is not a feature of French culture, and “popular capitalism” is a non-starter. “Pay as you go”, the accumulation of pension “brownie points” throughout a lifetime is construed in terms of solidarity between generations , a principle which is seen by many as more reliable than world financial markets. One solution has been found in the creation of a national reserve fund, which is a collective pension fund in all but name. It is expected to accumulate and invest funds provided by privatizations, or the selling of wave lengths to mobile telephone companies. This is run by the State, and offers no guarantee to individuals, but many in France tend to trust the State more than they do bankers.
The reform of supplementary pension schemes in the private sector is highly controversial. The government is drawn into this debate, although the funds are theoretically run by “social partners”. Unions are prepared to accept contribution increases whereas employers had rather see a reduction of pensions, paving the way for private pension funds, and an increase in retirement age. In practice, early retirement has become so widespread, and is now so entrenched, that changes in the retirement age would amount to a reduction in pensions. The popularity of early retirement bears probably some relationship with the traditional split, in France, between private life and public life. Hard, intensive work in the context of regular, fair employment is accepted, but the counter part is that real life takes place elsewhere, that people’s private concerns, whatever they are, are just as valuable as work, which takes us very far from the protestant work ethic.
As for the unification of the pension schemes, another public concern, it largely triggered the I995 crisis, and can only be considered with extreme caution.
Poverty, exclusion and solidarity.
Poverty was never construed in terms of “culture” and the poor are not described as an “underclass”. The stigmatization of poverty is therefore much less strong than in other countries, even if the containment of fraud is a public concern. The poor are seen as the victims of economic adjustment, who must receive help in financial terms, but also in the form of inclusive policies, leading to social integration through the labour market. The I980’s saw an increase in inequalities, partly as a result of neo liberal policies, and increasing difficulties for school leavers to find work. Poverty increased among young people, at a time when it was decreasing among the elderly, as the pension schemes were eventually reaching maturity, and yielding full pensions. This was compounded by the phenomenon of multiple deprivation – health, education, housing, crime - and by the geographical concentration of problems in some areas, which, in France, are rarely in “inner cities”, but most of the time in isolated suburban estates. Provision for poverty had been in existence for a long time, but was so far targeted at specific categories: the disabled, single parents, widows, the elderly poor, the long term unemployed. The poverty generated by the new industrial revolution of the I980’s could not be dealt with adequately by those benefits: childless unemployed workers in their late 20’s were a new problem. The basic income for social integration (RMI), which tops up existing benefits, is the result of a compromise between the concept of a citizen’s income, requiring no counterpart from the claimant, and the notion based on the centrality of work, and the importance of getting people back into the labour market. It is linked to “social integration”, which can mean retraining or the acquisition of very basic social skills, which some people have lost. However, failure to join a scheme for “social integration” does not disqualify anyone from RMI if this failure is due to the inadequacy of the schemes on offer. This means that in practice integration is optional, since the State has shied from accepting the burden of the creation and management of schemes, for one million claimants. The cost of such schemes would be enormous. The basic flaw of RMI is its inability to discriminate between people who are deprived of any skills at all, and cannot possibly find a place in today’s increasingly sophisticated and demanding labour market and society on the one hand, and people with a working and learning potential , who are perfectly employable, on the other hand. In practice, the fall in the unemployment rate seems to indicate that the latter category finds its way back to employment on its own, or thanks to the training schemes provided under other agencies.
Changes in social security law make it possible for people to combine a small wage and social benefits for some time, so as to avoid the poverty trap, and increase the attractiveness of paid employment. People under 25, who should be available for vocational training schemes or for full time education if they cannot find employment, are not eligible, since eligibility might act as a deterrent, and affect their potential employability.
The amount of the RMI was in 2000 2552FF, or 390 Euros a month. The total number of people deemed to be in poverty in I996 was estimated at between 4.5 and 5.5 Million. (Observatoire national de la pauvreté, 2000)
The distribution of unemployment benefits and the search for a job, or for a training scheme are managed by two different institutions. Unemployment benefits were created at a very late stage, in 1958, under General De Gaulle, in whose eyes the joint management of the funds by “capital” and “labour” would encourage a culture of cooperation instead of confrontation. The benefits fall into two categories. Either one is covered by a form of insurance, conditioned by a period of regular employment : in this case, the insurance is financed jointly by contributions from employers and employees. Those who are not eligible for an insurance cover, such as the long term unemployed, receive more modest benefits, financed through general taxation, in the name of solidarity. However, both sorts of benefits are distributed by the same agency, which receives funding from the State. One can easily recognize the conflicting influences of bismarckian principles – in the case of “insurance”- and of the beveridgian model – in the case of solidarity benefits. The insurance based benefit is proportional to the person’s previous wage, and gradually decreases every 6 months. It cannot be less than 3100 FF a month (or 473 Euros). In I997, he average amount was 4500 FF (687 Euros). (DRESS p.297) The majority of the unemployed are covered by the insurance scheme.
The number of unemployed workers throughout the I990’s has slightly overtaken the 3 million mark, and is currently decreasing.
Whether job creation is an economic concern or one which should devolved to social policy is a fundamental political issue. France abandoned Keynesianism in the I980’s, and has shared the concern of most European countries for the inflation rate and the reduction of budget deficits, a policy symbolized by the criteria jointly imposed by European governments as a precondition for Economic and Monetary Union, and followed by the European Central Bank. The demoting of unemployment as the chief priority of governments has been compensated by a number of policies and agreements with social partners, all aimed at job creation. The ARPE (allocation de remplacement pour l’emploi) is a case in point. Early retirement is encouraged and subsidized by the State, if the job is offered to a young worker under 26. This is deemed advantageous for the pensioner, who enjoys free time on a full pension at 55, for the young worker, and for the firm, which benefits from organizational flexibility and the lower wage paid to a junior employee. Given the social cost of unemployment, the bottom line, for society, is clearly positive. A major reform of benefits is being introduced, (the plan d’aide au retour à l’emploi) whereby unemployed workers who agree to go through an approved training scheme will get increased benefits. In a context of falling unemployment, this discriminates between the employable and the non employable claimants, and leaves open the question of the future of the “excluded”. Whether the discrimination will be positive or negative remains to be seen. However, improving the incentives of work and training goes with the grain of European social policy, and does not necessary include a moral stigmatisation of failure.
Education is not classified under social policy in France, contrary to many countries. Governments do their best to devote the largest budgets of all to the education ministry, a move which is only possible because social security is not included into the budget. It is therefore seen as much more essential than social policy. The reason for this is probably to be found in the specific political status of education since the French revolution. If equality is the ultimate goal of a democratic society, and if dynamism and progress are to be guaranteed at the same time , then the education of the whole population and the selection of the best students are the only possible pathway, a philosophy summed up in a nutshell by former education minister Chevenement, who coined the phrase “republican elitism”, a polite term for “ meritocracy”. The contradiction between the need for equality and the drive for selection is central to educational debates.
Education is free and compulsory until the age of 16. Children are accepted in state schools (“Ecoles maternelles”)from the age of 3, and sometimes 2 and a half: they will stay there for 3 years. From the age of 6 to 11, they will go to a primary school, then to a “college”, for another 4 years. No streaming at all is operated, and access is open to all children. This has been the case since the I970’s, and replaced a more complex system, in which children followed different routes from the age of 11.
Social differences between children are reflected in their choice of optional subjects, in the yawning gap between standards of literacy at age 11, and in achievement generally between the ages of 11 and 15. This complex issue has led to an ongoing moral crisis among the education professionals . This is compounded by the competition between the public and the private sector in education. The private sector is a legacy from history, and is largely controlled by the Catholic Church. It dates back to the late 19th century, when the competition between the new French republic and the more conservative institutions and groups led to a compromise, in which the functions of the church and those of the state were completely separated, and public education became secular. The Church kept its own schools, and gradually obtained recognition and subsidies from the budget. The religious, historical element is not totally absent from current debates, but is probably secondary. The private schools enable middle class parents to avoid direct contact with supposedly rowdy and illiterate children. In some areas with a large immigrant population, the ethnic motivation is also to be accounted for. Private schools are generously subsidized, and social exclusiveness is not based on financial factors. They enjoy a lot of support, partly also because, in some cases, they represent a last resort for parents whose children have not achieved in the public sector . This is very controversial issue, and, over the last 20 years, mammoth demonstrations have been held in support of one camp or another, making reform impossible.
After the age of 15, pupils are streamed into either technical schools or “general” ones. The most selective streams heavily emphasize scientific subjects. A majority of young people take the final examination, (baccalaureat) , the pass rate being approximately 70%.
Higher education is divided into two watertight compartments: On the one hand are the selective “Grandes ecoles”, which can only be entered 2 years after the baccalaureat, spent in intensive training. The competitive examinations giving access to the Grandes Ecoles are sometimes fairly demanding. The managerial, administrative and engineering elites of France are the product of Grandes Ecoles. Science and research, however, are not within their ambit, but fall under the responsibility of Universities and of Research institutes, such as the CNRS, the French equivalent of an “academy of science”. Universities provide access to all students who have passed their baccalaureat. A place is guaranteed, although not necessarily in the subject of the students’ choice. This has led to an increase in the overall educational standards of young people, over 50% of whom now spend at least two years in higher education. However, this considerable influx of sometimes fairly average students, who would not have access to university in many other countries, has led to a fall in the standards of universities, at undergraduate level, and is extremely costly. This is a highly controversial issue, but all attempts at reinforcing the selectivity of universities have been met by fierce reactions from students, especially in the context of mass unemployment. The negative impact of this change has been mostly limited to the first two years of university undergraduate programmes. The impact on research, and on post graduate studies, where access is selective, is non existent. Whether the evolutions in the labour market and the improvement of vocational courses in universities will allow better streaming in the future remains to be seen. The fee for students is extremely low (2000 FF, or 305 euros, including social security contributions, ie. full medical coverage).