The government is
struggling to find ways to save on social benefits. It has reached a stalemate
by excluding pensions from the field of reflection and by announcing too early
targeted revaluations (AAH, minimum old age, etc.). The solution may come from
the return to employment of the unemployed and beneficiaries of the RSA, but it
will take time.
By urging France on Monday
to cut social spending and simplify a complex system of benefits, the IMF
supported where it hurts. Launched awkwardly by the Bercy ministers, the social
aid debate is already causing concern, even annoyance, within the parliamentary
majority. Taxed for months to make the game of the rich, many elected
Macronists dread budget cuts that would destroy their efforts to educate on the
social side of the politics of the majority.
And yet, paradoxically, the government does not have a hidden plan on social assistance. Even the "2022 Public Action Committee" - composed of independent experts who are working on reforms to save some 30 billion - should not focus on benefits.
And yet, paradoxically, the government does not have a hidden plan on social assistance. Even the "2022 Public Action Committee" - composed of independent experts who are working on reforms to save some 30 billion - should not focus on benefits.
An insoluble equation
In this case, the first person in charge is Emmanuel Macron, who has a little trapped alone. The head of state gave an equation impossible to solve to his teams.
First element: reduce the weight of public expenditure in GDP by three points (about 70 billion). Knowing that social spending accounts for half of these expenditures and is "naturally" the most dynamic (many retirements, the effects of aging on health expenditure, etc.), this field cannot be exempted from efforts to achieve such result. Especially since the state and local authorities are already under pressure.
In this case, the first person in charge is Emmanuel Macron, who has a little trapped alone. The head of state gave an equation impossible to solve to his teams.
First element: reduce the weight of public expenditure in GDP by three points (about 70 billion). Knowing that social spending accounts for half of these expenditures and is "naturally" the most dynamic (many retirements, the effects of aging on health expenditure, etc.), this field cannot be exempted from efforts to achieve such result. Especially since the state and local authorities are already under pressure.
But the President of the
Republic added a strong constraint: no short-term savings measures on pensions.
The reform establishing a universal scheme by points must guarantee equity
between French, without affecting the main parameters such as the legal age of
departure, which will remain fixed at 62 years. A risky choice, because if the
financing needs are less strong, they are calculated on the basis of a
favorable economic situation and a significant reduction in the replacement
rate (relative level of pensions over wages) over the long term. An evolution
that could prove politically untenable.
On the other important
budget side of the social model, Medicare, spending should not increase by more
than 2.3% per year, said candidate Macron. A quantum confirmed since. If the
Minister of Solidarities and Health, Agnes Buzyn, tried unsuccessfully to obtain
an increase, the Ministry of Public Accounts cannot bet on an increased effort
on this side. The construction of the family policy seems also undermined,
after the cuts of François Hollande and in a context of declining birth rate.
Benefits increase without compensation
Emmanuel Macron, on the other hand, was much more talkative during the electoral campaign on his commitments of new social expenditures, complicating a little more the equation. Increases of € 100 a month in minimum old age and disability allowance were passed quickly, as well as the first step of increasing the activity premium for the working poor.
These measures are significant, their cost is not negligible, but they are a little considered as ancient history, having been in the public square for more than a year, even though they have not yet entered into force for those interested! Only the minimum old age was raised by 30 euros on April 1st.
Emmanuel Macron, on the other hand, was much more talkative during the electoral campaign on his commitments of new social expenditures, complicating a little more the equation. Increases of € 100 a month in minimum old age and disability allowance were passed quickly, as well as the first step of increasing the activity premium for the working poor.
These measures are significant, their cost is not negligible, but they are a little considered as ancient history, having been in the public square for more than a year, even though they have not yet entered into force for those interested! Only the minimum old age was raised by 30 euros on April 1st.
An activity bonus to be carefully reformed
One thing is certain, these gestures can no longer be advanced as a counterpart to savings measures, which, they have never been explained upstream: the famous three points of GDP were certainly brandished during the campaign, but apart from the abolition of 120,000 civil service posts (an objective that seems unreliable), this remains an abstraction. On the savings measures that will be announced in the future, the head of state will take the risk of being reproached for not having said it before his election.
One thing is certain, these gestures can no longer be advanced as a counterpart to savings measures, which, they have never been explained upstream: the famous three points of GDP were certainly brandished during the campaign, but apart from the abolition of 120,000 civil service posts (an objective that seems unreliable), this remains an abstraction. On the savings measures that will be announced in the future, the head of state will take the risk of being reproached for not having said it before his election.
The sea snake of the social minima
So what to do? The government is working on social minima. The Macron project provided for a single social payment including all allowances. But this sea serpent project is very complicated: either alignment is done from above, and costs billions; either it is done at the bottom and leads to decreases in resources for poor people ... That's why the executive will be satisfied with a first rationalization: the benefits will be calculated on the basis of the resources of the current year, and no longer the previous years. With some savings, but of a limited scale.
Bercy is also working on a reform of the activity bonus. But again, the room for maneuver is tight, because Emmanuel Macron has committed to increase it very strongly for people at the SMIC. In the end, more conventional planes - de-indexation of benefits - could resurface, although the government is touting structural reforms.
So what to do? The government is working on social minima. The Macron project provided for a single social payment including all allowances. But this sea serpent project is very complicated: either alignment is done from above, and costs billions; either it is done at the bottom and leads to decreases in resources for poor people ... That's why the executive will be satisfied with a first rationalization: the benefits will be calculated on the basis of the resources of the current year, and no longer the previous years. With some savings, but of a limited scale.
Bercy is also working on a reform of the activity bonus. But again, the room for maneuver is tight, because Emmanuel Macron has committed to increase it very strongly for people at the SMIC. In the end, more conventional planes - de-indexation of benefits - could resurface, although the government is touting structural reforms.
Priority to return to work
Aware of the difficulties of the exercise, the executive intends to focus in the coming weeks on the return to employment of the unemployed and beneficiaries of social minima, in the framework of the poverty plan and the plan of 15 billion on the training. The pool of savings on social spending is de facto very important in this area. But that involves a big initial investment and patience for the results ... The debate on social assistance is just beginning.
Aware of the difficulties of the exercise, the executive intends to focus in the coming weeks on the return to employment of the unemployed and beneficiaries of social minima, in the framework of the poverty plan and the plan of 15 billion on the training. The pool of savings on social spending is de facto very important in this area. But that involves a big initial investment and patience for the results ... The debate on social assistance is just beginning.
SAISI
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