A new system should come into force for jobless cross-border commuters living in France: their unemployment benefits will be calculated on the basis of a reduction of almost 50% in their Luxembourg income. Photo: Shutterstock

A new system should come into force for jobless cross-border commuters living in France: their unemployment benefits will be calculated on the basis of a reduction of almost 50% in their Luxembourg income. Photo: Shutterstock

The French social partners have agreed on reducing benefits for cross-border unemployed workers. If they were to lose their jobs, the loss of earnings would reach 47% from January 1st. The concept of a “reasonable job offer” will also be tightened.

The subject has been on the table for several weeks: Unédic, the joint body that manages unemployment benefits in France, wants to recover the shortfall resulting from the application of European Regulation 883/2004 on the coordination of social security schemes. It’s a regulation that places the burden of compensation for periods of unemployment on the country of residence, while contributions are paid in the country where the activity is carried out. A mechanism that, given the differences in salary levels between France and countries bordering it, costs €800m per year for 77,000 French cross-border workers receiving benefits. 17,000 of them are .

Magical coefficient

The renegotiation of this European regulation launched in 2016 is still at an impasse. Unédic, which has no control over the subject, therefore engaged in a sleight of hand during the renegotiation between unions and employers of the new rules for unemployment insurance for the period 2025-2028: it was decided to modify the formula for calculating their allowance by adding a coefficient supposed to take into account the differences in salaries between countries of employment and residence. Employees working in Luxembourg and Switzerland are the most affected. Starting from 1 for France, this coefficient would be 0.9 for Germany, 0.76 for Belgium, 0.53 for Luxembourg and 0.47 for Switzerland. The shortfall for a French unemployed cross-border worker would reach 47% compared to what they currently receive. €1,000 would become €530.

This adjustment alone should generate savings of €1.4bn between 2025 and 2028. Overall, all the new unemployment benefit rules should generate substantial savings in France: €179m in 2025, €405m in 2026, €893m in 2027, €1bn in 2028 and €1.7bn per year in savings at cruising speed. An unprecedented level in the history of unemployment insurance agreements according to observers in France. These are figures to be put into perspective with the €13.05bn in levies programmed by the French state between 2023 and 2026 in order to finance two operators dedicated to employment and training (France Travail and France Compétences). In 2024, without this levy, Unédic’s surpluses would have amounted to €3.1bn euros in 2024 compared to the €300m expected in the end. Unédic’s debt will reach €59bn at the end of 2024.

Enhanced monitoring of unemployed cross-border workers

As for monitoring the unemployed, the social partners refer to the labour minister and France Travail--and to ask for a revision of the notion of a “reasonable job offer” so that cross-border workers cannot refuse a position at the French salary level.

Paradoxically, it is this monitoring of the unemployed and their reintegration that is blocking an agreement on the reform of the system. Luxembourg’s main reservations relate firstly to the practical consequences of the last member state where the worker was employed becoming fully eligible for unemployment benefits. For the social security ministry, in addition to the financial implications, it would be necessary to have more staff to monitor cross-border job seekers and to create new procedures for exchanging information with the authorities of the member state of residence.

“In addition to the proposed paradigm shift, the conditions that would determine it are equally problematic. This essentially concerns the duration of employment from which the last member state of employment would become competent for the payment of benefits and the monitoring of the jobseeker residing in another member state. Furthermore, the periods of export of unemployment benefits proposed in inter-institutional exchanges do not promote a rapid reintegration of the unemployed into the labour markets,” explains the ministry.

CGT opposed to the agreement

Negotiated by the five representative trade union organisations (CFDT, CGT, FO, CFE-CGC, CFTC) and the three employer organisations (Medef, CPME, U2P), the new rules for unemployment insurance should apply from 1 January until 2028. This is subject to validation by the union bodies--but validation is far from being achieved on the CGT side. Overall, the text takes up the provisions adopted at the end of November 2023--reduction of the employer contribution on salaries from 4.05% to 4%, monthly payment of benefits, improvement of the conditions of affiliation for seasonal workers, overhaul of aid for unemployed people who create or take over a business--by including consideration of the consequences of the pension reform--a reform that the unions hope to see buried--and therefore the question of cross-border workers.

Read the original French-language version of this news report

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