Is the labor shortage in catering and tourism due to the 2021 unemployment insurance reform?

A waiter serves customers on the terrace of the café “Les Deux Magots”, in Paris, on May 19, 2021.

Atlantico: There is a labor shortage in catering and tourism. To what extent is it due to the 2021 unemployment insurance reform?

Alexandre Delaigue: Many sectors are experiencing job shortages. However, when we look at the reform of unemployment insurance, from the beginning we could see that it contained a number of changes that are very unfavorable for people who carry out a seasonal activity. It was possible to envisage that this would result in many people abandoning the idea of ​​having a seasonal activity or at least that it would disorganize the whole thing quite strongly.

New rules on unemployment eligibility for seasonal workers have come into force. From now on, it is necessary to have worked 6 months during the last 24 months in order to be able to benefit from unemployment allowances. Before, the period was 4 months. But seasonal contracts are often 2 month contracts. People who worked in July – August previously, if they have worked two summers, they are no longer entitled to unemployment insurance. Workers specializing in seasonal activities, ski instructors in the winter and lifeguards in the summer, or who will work in the tourism sector but who will be extras in the restaurant business during the summer, when there are many weddings and who the rest of the time will have a much lower activity, for all these people who have a specialized trade and whose activity is necessarily seasonal, such as agricultural workers, the trade consisted before of exercising their activity by doing the number of months that made it possible to benefit from unemployment the rest of the time and therefore to alternate periods of work, periods of unemployment in this way.

New eligibility rules are therefore in force. The same applies to recharging unemployment benefits. Today, the minimum duration of work to recharge one’s unemployment rights is 6 months or 910 hours, whereas before it required 150 hours of work. This makes it much more difficult to have this equation in which you have seasonal activity for a few months of the year and unemployment for the rest of the time.

These measures, which were intended to reduce the use of precarious work, short contracts and precarious activity, actually have a perverse effect. Many people who had a seasonal activity no longer have the same possibilities. So they changed jobs. They have given up exercising a seasonal activity. For employers, it becomes impossible to recruit staff.

With the reform, there is a bonus-penalty system for companies that make heavy use of short contracts. The hotel and restaurant sector has been spared by this system. But the companies, which make extensive use of this type of short contract, suffered a penalty which was supposed to limit the use of precarious work.

The paradoxical result is that companies whose business requires a lot of short contracts can no longer carry out their activity.

The objective was to reduce the use of precarious work and also to save unemployment insurance while presenting the system as part of the fight against precariousness. These diets were quite expensive. These schemes subsidized sectors that use precarious work.

Since October 2021, the unemployment insurance reform has sanctioned discontinuous professional activities. Is this really what could have played into the recruitment problems? Until what point ?

A lot of things changed at the same time. It’s not just the unemployment insurance reform.

But by way of example, there are many countries where the problem arises in the same way. And there are plenty of industries that are struggling to recruit. In the United States, the restoration had a lot of trouble recruiting because they laid off a lot of people at the time of confinement when the activity stopped. Now they are rehiring. But many workers say they are no longer interested in catering, working conditions are difficult and they are not paid very well. The fact that all employers are trying to rehire at the same time drives up wages.

For a large number of people who work in this type of hotel and restaurant sector or for people who had seasonal jobs such as ski instructors, there were still two years during which they had no activity. Even without the unemployment insurance reform, a number of people have decided to leave their jobs.

Unemployment insurance certainly played a role, but other factors were also important.

There are other countries which have not had unemployment insurance reform and in which there have also been recruitment problems. The accordion cost of lots of Covid-related activities inevitably played a role. A large number of people have been made redundant. And at the same time, lots of people have to be rehired at the same time. Automatically, this created a traffic jam.

If unemployment insurance is not completely involved, what are the other reasons?

There are already the special circumstances of the current period. Demand is also picking up very strongly after being very weak. There is a big recovery in demand and tourist activity. A lot of things changed at the same time.

In these seasonal activities, it is perhaps not entirely normal for unemployment insurance to subsidize them.

The solution might be for employers, if they want to attract staff, to improve the working conditions which are quite difficult in these sectors, with higher salaries.

In a market economy, if you want to buy something and you can’t find enough, you have to offer, you have to pay more.

If there was an impact of the reform on seasonal workers, does that mean that the reform was bad for all that?

This reform of unemployment insurance was made with a dual objective. On the one hand, reducing costs (for unemployment insurance) by pushing people to work by making unemployment benefits difficult to encourage people to work more. This can be very positive or, under duress, worsen the conditions when people are unemployed by pushing them to accept the offers that will be offered to them.

It can be seen that unemployment is decreasing. Unemployment is very low in France. It is possible to look at the glass of these reforms as half empty or half full.

If you want to look at the glass half full, it is possible to consider that unemployment is rather low, that it is rather a question of job shortages and that the reform succeeded in reducing unemployment.

If you want to look at the glass half empty, it is possible to see that the living conditions for people who used to have a seasonal activity have become much more difficult. The people who foot the bill are the people who can no longer do those jobs. A number of these activities may have to disappear or raise prices.

In the current economic context with the end of the Covid and with the beginning of the new mandate of Emmanuel Macron, could there be a positive outlook vis-à-vis labor shortages and this application of insurance unemployment, in particular through the objective of full employment?

Employment prospects for the coming months are not determined by the unemployment insurance reform but by macro-economic conditions, inflation, the fact that the ECB has decided to fight inflation and depending on budgetary political support as well as the result of the legislative elections.

The unemployment insurance reform is a bit of a drop in the bucket compared to these macro-economic elements which are much more important and decisive. The reform of unemployment insurance will have a longer term effect. Above all, it will affect the general structure of employment and the form that employment will take more than the level of real employment.


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