“It will be a long CMP, perhaps until late at night,” warned an LR parliamentarian: seven deputies and seven senators are responsible this Wednesday, November 27, for finding a compromise version on the social security budget project for 2025, during a joint meeting. Commission (CMP). The government coalition has a narrow majority (eight votes against six), but the text, largely adopted by the Senate on Tuesday evening, is full of very delicate measures on the reduction of employers’ contributions, on the increase in pensions, on reimbursement of medicines such as taxes on drugs, drinks or tobacco. Revision.
Employer contributions
Eager to involve businesses in the collective effort to turn around the books, the government tackles a burning issue, that of reducing employers’ contributions. Considering that in recent years these have increased dramatically, reaching almost 80 billion euros, he proposed an effort of four billion euros in favor of employers, reduced to three by the Senate.
But the Macronist camp, like the employers, rejected this measure. senators and deputies approved on Wednesday afternoon a reduction in exemptions from employer contributions in the amount of 1.6 billion euros for 2025. To reach a compromise on the social security budget, according to parliamentary sources. This reduction, which amounts to increasing the cost of labor, is one of the most flammable measures of this budget project, vigorously fought by the Macronist deputies of the Ensemble pour la République, the main group of the government coalition in the Assembly. Its representative, Stéphanie Rist, voted against in the commission, but ultimately should not oppose the text drafted by the latter. The project also proposes to subject apprentices to two social contributions (CSG and CRDS), and to increase the taxation of ”free shares” distributed by employers to their employees or managers.
Retirements
The compromise found between Republicans and the government to index pensions at half inflation from January 1st – with a supplement from July 1st for pensions below the minimum wage - appears in the text voted by the Senate. And Michel Barnier defended him on Tuesday on TF1. But the impact of the measure on the purchasing power of pensioners is one of the red lines set by Marine Le Pen, who threatens the government with censorship and considers this compromise “inadmissible”. To the point of changing the government’s position?
Another hot point on the retirements of local agents is the staggering of the increase in contributions to the national pension fund for local authority agents (CNRACL) from three to four years, a government concession adopted in the Senate.
Working hours
The measure aimed at making workers work without pay for seven extra hours a year to finance dependency has finally disappeared from the final text. An agreement was reached between LR deputies and senators to renounce this “solidarity contribution”. And if the centrists in the Senate denounced this agreement made without consultation, the balance of power in the CMP is such that the removal of the measure seems inevitable.
Soda, games and tobacco
Both the National Assembly and the Senate had widely debated “behavioral taxation” measures, in particular the strengthening of the “soda tax” (intended to limit the amount of sugar in this type of drink). The senators further increased this tax – 4 cents per liter for the less sweet drinks, and up to 35 cents per liter for the sweetest -, also combining it with an increase in the tax on ”sugary drinks”, they voted against the opinion of the government.
The text under discussion at the CMP also envisaged an acceleration of the increase in the price of a pack of cigarettes - which would go from 12.70 euros on average, or 40 cents more – but the measure was ultimately rejected.
The text also includes an increase in taxes on lotteries, casinos and other sports betting, with the agreement of the government.
Defunds and “rabbit” tax.
Although the system does not appear in the black and white text of the law, the government’s intention to reduce social security reimbursements for doctor’s visits and drugs by 5% – which should lead to an increase in health insurance – continues to raise concerns itself, in particular to the RN, which makes it an argument in favor of censorship.
Another very concrete debate for insured people: the ”rabbit tax” introduced in the Senate, which proposes to charge patients who do not honor medical appointments.
If the deal is confirmed, the Social Security financing bill for 2025, in its compromise version, is expected to result in a high-risk 49.3 for Michel Barnier and his government before the National Assembly on Monday.
– What are the key points of contention regarding the 2025 social security budget in France?
Interview between Time.news Editor and Fiscal Policy Expert
Time.news Editor (TNE): Welcome, everyone. Today, we’re diving into an incredibly important topic: the 2025 social security budget project in France. With us is Dr. Claire Moreau, a fiscal policy expert with over a decade of experience analyzing government budgets and social policies. Claire, thank you for joining us.
Dr. Claire Moreau (CM): Thank you for having me. It’s a pleasure to be here.
TNE: Let’s jump right in. There seems to be a lot of tension around the compromise version of the social security budget, especially regarding employer contributions. Can you break down what this reduction means for businesses and their employees?
CM: Absolutely. The government is aiming to reduce employer contributions, which have skyrocketed in recent years, totaling nearly 80 billion euros. They initially proposed a reduction of four billion euros, which the Senate trimmed down to three billion. This is significant as it directly affects the cost of labor. However, the latest decision to reduce exemptions by 1.6 billion euros could increase labor costs, which is contentious, especially among Macronist deputies who argue it could harm job creation.
TNE: It sounds like a balancing act between supporting businesses and ensuring employees don’t bear the brunt of higher costs. What’s the perspective of the government’s coalition on these measures?
CM: Indeed, it’s a delicate situation. The Macronist camp, particularly the Ensemble pour la République group, views the employer contribution changes critically. There’s an inherent tension here: they want to alleviate the burdens on businesses but must also maintain the support of their constituency, who might suffer from rising costs or diminished benefits if the compromise leans too far in favor of employers.
TNE: Speaking of displaced priorities, let’s discuss pensions. The indexing of pensions at half inflation paired with a supplement for lower earners has sparked controversy. How do you see this affecting retirees?
CM: This indexing measure is crucial for protecting retirees’ purchasing power, especially given the rising cost of living. However, Marine Le Pen’s opposition, labeling it “inadmissible,” indicates significant political friction. If the government fails to navigate these objections, they risk backlash from the elderly population, which could influence future elections. It appears that any compromise will have to tread carefully to ensure that those at the lower end of the pension scale don’t face undue hardship.
TNE: Switching gears a bit, regarding the recent proposal to increase taxes on sugary drinks, what implications does this have for public health and consumer behavior?
CM: The idea behind “behavioral taxation” is to discourage unhealthy consumption patterns, which theoretically should lead to better public health outcomes. Increasing the soda tax could reduce sugar consumption notably, particularly among lower-income households who may respond more sensitively to price changes. However, it also raises questions about consumer choice and whether the government should intervene at such levels in regulating personal behavior.
TNE: It indeed raises pertinent questions. Now, we’ve also seen measures related to workforce contributions disappear from the final text. What does this say about the current political climate and negotiation power dynamics?
CM: The removal of the “solidarity contribution” for extra unpaid work hours highlights the importance of negotiation in this CMP process. While the centrists in the Senate voice discontent about the lack of consultation, it’s indicative of the need for consensus amid a fractured political climate. As parties jockey for position in a narrow majority, those in decision-making roles need to be extraordinarily strategic about the proposals they put forth.
TNE: Last question, Claire. With all these changes and negotiations, how do you see the social security budget shaping up as a reflection of France’s broader economic and social priorities?
CM: The negotiations surrounding the budget reflect a broader struggle within French politics to balance growth, social equity, and sustainability. The choices made reflect deep societal values about the role of the state, particularly how much responsibility it has for supporting the most vulnerable. As we look ahead, these decisions will undoubtedly impact the next electoral cycle and the public’s confidence in the government’s ability to manage not just the budget, but also the welfare of its citizens.
TNE: Thank you, Claire, for your insights. It seems clear that the upcoming months are crucial for navigating these complex issues. We appreciate your perspective as we continue to monitor these developments.
CM: Thank you, and I look forward to seeing how this all unfolds!