LState economic intervention to promote a policy of full employment is essential to social cohesion, and therefore to the functioning of our democratic and liberal societies. The difficulty of the exercise lies in the fact that, in the private sector, it is the companies, and not the State, which ultimately decide whether to hire or not. When a company hires, it undertakes in advance to pay a salary to the worker in the hope that the latter’s contribution will bring in more than its salary cost.
By hiring, the company is betting on a future dependent on multiple parameters that are difficult to control, such as maintaining demand and the state of competition, which determine an order book. This bet is never guaranteed and, when the company has doubts about its probability, it prefers to refrain from hiring, which all entrepreneurs, including the one I was, will confirm.
A public policy of full employment will only be fully effective if it effectively reduces the risk of businesses linked to hiring. However, for more than thirty years, successive governments have addressed this issue of risk through the sole prism of reducing charges on businesses. There is no doubt that by reducing labor costs we reduce hiring risk. But we do it at the expense of public budgets or by reducing social spending.
Full employment will not be reached at the end of the five-year term
Today, the total exemptions from social contributions are close to the 88 billion euros. This sum is equivalent to that of the education budget and represents double that of the ecological transition of the territories. A sum that is all the more costly for the public good as the various successive measures have proven to be ineffective.
Everyone understands that by reducing the cost of labor by 10% we only reduce the risk by 10%, which leaves 90% of the risk, that is to say almost all of it, to be borne by of the company. This is undoubtedly what explains why, despite thirty years of policy of lowering payroll taxes, the objective of full employment has never been achieved.
In this third quarter of 2023, private employment has stagnated, and we can reasonably – and unfortunately – predict that full employment, assimilated to an unemployment rate of 5% maximum, will not be reached at the end of the five-year term. . However, there is a proven solution to reduce risk: mutual insurance.
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