On the road to a new job?

Was it the fact that Emmanuel Macron himself resigned to take up another post while continuing to receive his ministerial salary for 3 months that made him think of this scheme? In any case, this proposal presents a number of advantages for employees, although these need to be put into perspective when we compare them with existing practices and provisions. Nor is it without its problems.

Right to unemployment insurance for employees who resign: what are the benefits for employees?

For the leader of "En marche", these new rights would have three advantages for employees: (i) enabling those who wish to do so to change employer more easily, but above all to change career or profession; (ii) increasing their bargaining power and therefore the incentive for companies to "improve the quality of life at work, recognise their autonomy, their entrepreneurial freedom, respect for life-time balances" and finally (iii) reducing the litigation that arises every time a dissatisfied employee seeks to be dismissed rather than resign in order to maintain their unemployment insurance entitlements.

Since life satisfaction is closely correlated with job satisfaction, we cannot downplay a measure that makes it easier to change employer and, above all, profession. After all, the desire to change careers is fairly widespread.  According to a survey carried out by the AFPA in 2014, for example, almost one in three working people were planning to change direction in the next three years. Among them are those whose careers are already well advanced. But they are not the only ones. There are also people in their thirties who have procrastinated in a first job that did not match their expectations or their training. Or those who, on the other hand, no longer find what they are looking for after a few years in the sector they joined with great enthusiasm at the end of their studies. And it's a safe bet that this desire will not diminish in the future in a world where job content is changing ever more rapidly, where training and self-training opportunities abound and where employees' ability to retrain increases steadily with their level of education.  This new right offered to those who want to change direction could also help some people to counterbalance the reasoning bias that consists of keeping the same job and remaining dissatisfied with it, just because they have invested a lot of time, and sometimes money, in acquiring the skills needed to do it (the famous sunk cost fallacy).

In addition to the benefits for employees, this measure is also supposed to make the labour market more fluid, i.e. to facilitate the re-matching of jobs offered at a given time to individuals wishing to fill them, with a consequent gain in productivity, since employees who are satisfied with their jobs are often more productive. It is interesting to note in passing that, in the name of efficiency, companies generally defend the idea of being able to terminate employment contracts more easily than under current employment law. However, this measure is a reminder that employee-initiated terminations, and not just those initiated by employers, contribute in principle to the efficiency of the matching process, even if they can increase the frictional component of unemployment.

How effective?

In practice, the En Marche leader's proposal is not as radical as it might seem. Firstly, because since 2008 employees have already had the option of agreeing a "rupture conventionnelle" with their employer, which entitles them not only to unemployment insurance but also to redundancy pay after one year's service. The scheme has been an undeniable success (almost 390,000 in 2016), not least because its creation partly met similar needs: to reduce disputes at the time of termination of the employment contract and to offer employees a safety net following a joint agreement on their departure. Moreover, in practice, the "rupture conventionnelle" is sometimes misused to convey a unilateral desire to separate, either on the part of the employer, or on the part of the employee who wishes to resign while still benefiting from unemployment insurance. According to a recent study by the Centre d'Études de l'Emploi (2015), the combination of these two reasons could account for up to 50% of contractual terminations.

If the new system proposed by Emmanuel Macron is put in place, it should reduce the incentive for employees who wish to resign after more than 5 years in their job to try to be made redundant. We should see a partial substitution of one method of termination for another. The net effect on the total number of real or hidden resignations for this category could then be reduced. Even reduced, however, it will represent a high cost for unemployment insurance. This is because we must also take into account not only the windfall effects (the payment of benefits to those who would have resigned anyway) but also the opportunistic behaviour of those who withdraw from the labour market while seeking to benefit from unemployment insurance for a certain period of time. Including these two effects, the total cost is 2.7 billion or more, according to an estimate by the Institut Montaigne.

The final amount will depend on the control systems put in place. In addition to the requirement of a minimum of 5 years' employment, Emmanuel Macron specifies in his programme that the main safeguard against abuses will be "greater control over job-seeking, for which the resources of Pôle Emploi will be increased and the penalties made fair and credible" with the suspension of benefits for refusing more than two decent jobs. This safeguard will be all the more necessary as we also know that this provision is just one of the measures in a more general plan to overhaul the unemployment insurance system, which is much more ambitious. It provides for the right to unemployment benefit to be extended to the self-employed, entrepreneurs, the liberal professions and entrepreneurial farmers, who would henceforth be financed solely by employer contributions and an increase in the CSG.

But the effectiveness of monitoring, and even the administrative and political feasibility of radically increasing it beyond what Pôle Emploi has already put in place since 2009 and especially since the end of 2015, remains to be proven. In itself, monitoring search efforts is not enough. Sanctions must also be applied. In this respect, a recent analysis conducted by the OECD (2015) tends to show that while the frequency of checks in France is in line with the average for European countries, the penalties provided for are applied less systematically. We also know that excessive checks sometimes have perverse effects by pushing some unemployed people to accept low-quality jobs, which would be the last straw for employees who have unilaterally resigned from a permanent contract in the hope of improving their job satisfaction.

The fact remains that, considered in isolation, the possibility for resigning employees to benefit from unemployment insurance to change jobs and/or professions is an additional advantage compared to existing arrangements. This is also the reason why, politically, the measure is also presented as a quid pro quo offered to employees for the greater flexibility that will be required of them on the labour market. Changing jobs is always a gamble, but it can be a good thing both for the person taking it and for the economy if it improves the match between labour supply and demand. We'll find out on Sunday whether Emmanuel Macron's gamble has worked out for him personally. We will have to wait longer to find out whether it has also been a good thing for the economy.

References :
Signoretto Camille (2015) Quel bilan de l’usage de la rupture conventionnelle depuis sa création ? Connaissance de l’emploi, les 4 pages du CEE, n°121.
Langenbucher (2015), "How demanding are eligibility criteria for unemployment benefits, quantitative indicators for OECD and EU countries", OECD Social, Employment and Migration Working Papers, n° 166, OECD Publishing, Paris.