France plans to pare terms of work scheme designed to boost activity

PARIS (Reuters) - The French government laid out plans on Wednesday to rein in from October a reduced-time work scheme set up during the coronavirus crisis to prevent mass permanent layoffs.

The scheme’s update comes as France and other European countries that set up furlough schemes to save jobs grapple with how to encourage firms to put workers back into their jobs despite a still-fragile economic outlook, while keeping down the cost to the public purse.

Companies had put 7.8 million workers on furloughs or reduced schedules as of the end of May, Labour Minister Muriel Penicaud said last week.

From Oct. 1, workers will get 60% of their normal gross wages under the scheme, down from 70% currently, President Emmanuel Macron told employers and unions. Meanwhile, the state will reimburse employers up to 60% of the cost, instead of 85% currently.

However, a company can tap the existing furlough arrangements for only up to six months. On Wednesday the government also outlined a new longer-term programme that is more generous for the employee and company but demands commitments to safeguarding jobs.

The programme will allow a company to reduce an employee’s work by up to 40%. Workers will receive up to 70% of gross wages for the period out of work, with the state reimbursing firms up to 85% if the programme is tapped before October and 80% thereafter.

The government did not say how much the extended reduced-work scheme would cost the Treasury.

Unions broadly welcomed the new arrangement. But the hard-left CGT and Force Ouvriere said they regretted that job retention guarantees imposed during the period of reduced-work would not be binding beyond that.

“Even though they will benefit from financial support, companies will still be able to terminate jobs at the end of it, which is somewhat paradoxical,” CGT boss Philippe Martinez told reporters.

Meanwhile, workers’ time not spent on the job would have to be used for training, with the state taking on up to 80% of the cost.

Reporting by Caroline Paillez; writing by Leigh Thomas; editing by Richard Lough and Leslie Adler