Assessing the new minimum income benefit in France as a tool to fight in-work poverty
Newsletter 2011-2
Publication date : 2011-08-25
A new minimum income benefit, the RSA (Revenu de Solidarité Active), was introduced on 1 December 2008 in France as part of efforts to address in-work poverty, to improve the administration of social minima and to remodel the incentive structure so that work (or returning to education) is a more lucrative and attractive prospect. In addition, the RSA has simplified the provision of social protection by combining several previously separate schemes into a single sum. A household with no earned income is eligible for the “basic RSA” which is defined at the household level and takes into account the composition of the household. The “in-work RSA” acts as a top-up for people paid less than the national minimum wage (SMIC). Again, the supplement is sensitive to family situation; for a single person the supplement brings the sum up to the SMIC but for a childless couple the top-up level is 1.4 times the value of the SMIC. Pushing through this reform in a period of economic uncertainty was a real achievement. As a result of the reforms, the social welfare system is more transparent and therefore holds more legitimacy in the eyes of the public. The RSA reaches a total of 1.8 million households and is underpinned by a broad notion of social inclusion. However, there are some notable deficiencies, for example many young people are not entitled to RSA; the minimum benefit for a jobless household is less than half of the minimum wage; and services to help beneficiaries into work are not yet fully operational. It is proving difficult to reconcile the need to ensure a decent income, work incentives and cost efficiency. A national conference will evaluate how far the RSA has achieved its aims at the end of this year. This Peer Review was attended by nine countries (Belgium, Cyprus, Estonia, Greece, Ireland, Lithuania, the Netherlands, Portugal and Slovenia) in addition to the host country – France, a stakeholder representative from the European Anti-Poverty Network (EAPN), and EU Commission representatives from DG Employment, Social Affairs and Inclusion. It was held in Paris from 31 March to 1 April 2011. • The participation of all stakeholders is crucial.
The previous minimum income system (Minimum Integration Income - RMI) was based on a one for one trade-off of benefit for earned income, so that EUR 100 earned led to a deduction of EUR 100 from benefit paid. Now a “62% slope” is applied meaning that earning EUR 100 only leads to a EUR 38 deduction in benefit paid. Efforts have been made to encourage beneficiaries of RSA into employment, for example with assisted employment contracts and (improved) insertion mechanisms.
Didier Piard, Director for Social Action at the French Red Cross, warned that the number of working poor in France is rising markedly. To stem the build-up of working poor, there is a need to focus on preventative measures and to ensure that people know their rights. Employment services should be assessing their effectiveness; when people get work, it has to be real work not the kind of work that leaves them dependent on benefits. Enterprises should get more involved in the insertion process.
Sophie Quentin from the French Business Confederation (Mouvement des Entreprises de France) said that enterprises are concerned by working poverty but are unsure of their role in fighting it. To tackle social exclusion, recruiters should consider the potential and competences of candidates rather than their paper qualifications. More efforts are needed to get unions, local authorities and associations, and employers to work together. Whilst enterprises are comfortable with their role in economic insertion, they are less comfortable with social insertion.
Chantal Richard – from the French Democratic Confederation for Labour (Confédération française démocratique du travail) – noted that there are problems getting people to apply for the RSA. Namely there is social stigma, a lot of paperwork with little reward and limited awareness of the benefit. Research should be conducted into how people move from the benefit into suitably paid employment, and the reasons why some working-poor are not entitled to the RSA. Trade unions should continue to negotiate the rights of the working-poor in multiple domains at the national level (e.g. by occupation or within individual enterprises) but also at the European level.Lessons learned
• The RSA should consider the need to deal with the existence of precarious work in the long-term.
• The quality of jobs is crucial and needs to be safe guarded through legislation and agreements by social partners.
• Implementing measures to prevent poverty is likely to be a more economical strategy in the long run.
• Besides financial incentives it is essential to improve labour market conditions, for example to encourage workers into education or training, or to improve access to good quality services for job seekers.
• Coordinated actions such as the creation of standards to prevent social dumping, collective bargaining and tax benefit reforms may be required at the EU, social partner and national government level to tackle in-work poverty.
• There is a need for in-work poverty indicators at the European level to monitor changes over time.
A future Peer Review could investigate the role of entry level jobs in providing further career opportunities.
