Observation (CEACR) - adopted 2008, published 98th ILC session (2009)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - France (Ratification: 1974)

The Committee notes the information provided by the Government in reply to its previous direct request, and the information contained in the 21st annual report on the application of the European Code of Social Security.

Governance and financing of social security in periods of crisis. According to the Government, the social security deficit has continued to decrease. The improvement of the financial situation of the social security system remains a priority, which has set as its objective a return to financial equilibrium for the general scheme by 2011. Its strategy is based on new measures to contain costs, more secure resources and greater control over exemptions and “niches sociales”, the continued clarification of the financial relations between the State and the social security system and the reimbursement of earlier social security deficits by 2021. The Bill on finance and the financing of social security, which will be submitted to Parliament in the autumn of 2008, will include measures in that respect. In the meantime, several additional measures have been adopted in the context of the Act on social security financing for 2008, which introduced new sources of revenue, adapted various measures relating to exemptions from social contributions and abolished all measures granting total exemptions from contributions in relation to employment injury insurance.

The Committee trusts that the measures adopted or envisaged by the Government will be commensurate with both the gravity of the financial situation of the general social security scheme and the general responsibility of the State to ensure the viability and sustainable development of the system. It considers that the return to the annual equilibrium of social financing must constitute a priority for the public authorities. It nevertheless understands that the task of improving the financial situation of the social security system that is incumbent upon the Government is liable to become a greater burden in view of the current crisis in the global financial system, which may endanger social security funds. The Committee notes with concern that, according to the indications provided to the press in October 2008 by the directors of the Pension Reserve Fund in France, since the beginning of the year the Fund’s global assets have lost 11 per cent of their value, or 3.8 billion euros. In the current situation, the Committee believes it important to emphasize that, while it is true that the provisions of the Convention are not designed for the management of social security in a crisis situation, they nevertheless establish parameters compliance with which is intended to ensure the stability and sound governance of the system. A sound management policy in periods of crisis would therefore consist of bearing these parameters in mind to allow the progressive return of the system to its normal condition, even though emergency measures may temporarily introduce significant corrections into these parameters. The role of the Convention therefore takes on particular importance with a view to ensuring the concerted recovery for ratifying countries from the crisis by obliging them all to bring their social security systems back to the initial parameters.

The Committee also wishes to emphasize in this respect that during periods of crisis no member State can discharge its general responsibility under Article 71, paragraph 3, of the Convention for the maintenance of financial equilibrium and to safeguard the viability of the social security system without, at the same time, being committed to the obligation to achieve time-bound results. It is with the aim of achieving the desired result within the determined time limits that this provision of the Convention places each member State under the obligation to “take all measures required”, including emergency measures dictated by the crisis.

The Committee notes in this context that at the operational level, through the introduction since 1996 of the management of the social security system in the context of the annual Act on the Financing of Social Security, the French Government has progressively adopted one of the most significant arsenals of financial instruments and regulations in Europe. The experience acquired by the Government in the “tight” financial management of social security affords it comparative advantages to ensure wise governance in these perilous times for both the financial system and the social security system, by maintaining the latter within the parameters envisaged by the Convention. The Committee trusts that, despite the financial crisis, the Government will be in a position to specify in its next report, with reference to the relevant texts, the time-bound commitments and revised schedules that it has determined or intends to determine for:

(i)    re-establishing the financial equilibrium of the social security system;

(ii)   stopping the continued growth of the public debt in relation to social security.

(iii) paying off former debts contracted by the State;

(iv)  envisaging sufficient budgetary allocations to cover the State’s future commitments to social security, particularly in relation to the compensation of exemptions or benefits provided on behalf of the State; and

(v)   introducing governance rules to clarify the financial relations between the social security system and the State and to prevent debts from being renewed in the future.

The Committee in raising other matters in a request addressed directly to the Government.

[The Government is asked to reply in detail to the present comments in 2009.]