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pensions, employer contributions, local authorities… What savings avenues has the government already given up?

pensions, employer contributions, local authorities… What savings avenues has the government already given up?

The debates start from scratch. From Monday, November 25, Michel Barnier’s government submits its draft budget to the Senate, after rejection at first reading in the National Assembly. Through the finance bills (PLF) and social security financing bills (PLFSS), Michel Barnier’s government set out in search of 60 billion euros in savings to straighten out public finances and bring back the deficit to 5% of GDP in 2025.

The tenant of Matignon repeats it over and over again: his budget is “perfect”. Moreover, if it is indeed the government’s original text that is being discussed in the Senate, Michel Barnier’s team has already agreed to review its copy in recent weeks.

Developments for local communities

The government had originally estimated that the contribution requested from local authorities would amount to five billion euros, including three billion from the 450 largest of them. As the PLF’s arrival in the Senate, a chamber traditionally attentive to local elected officials, approaches, this ambition has been scaled back: “It may be a little more than two billion, but no, it won’t be five billion,” confirmed Monday morning the Minister of Budget and Public Accounts, Laurent Saint-Martin, guest on the Public Senate set.

As early as November 15, government spokesperson Maud Bregeon declared that the executive was open to discussions to “distribute the effort perhaps differently” between communities, in order to take into account the concerns of departments, which are facing an increase in social spending (RSA, social assistance for children, assistance for dependent elderly people and people with disabilities) while receiving less tax revenue .

While the government is proposing that 450 communities contribute three billion euros to a precautionary fund making it possible to supply the communities most in difficulty next year, the Minister of the Budget thus assured that there remained “details” to be resolved, opening the way to discussions with senators: “The governance of this fund, how we manage it, who participates in it, all of this remains to be defined (…). The scope of the 450 communities can be reviewed, it can be larger, smaller”listed Laurent Saint-Martin on Public Senate.

The minister added that the government had “heard” the request to exclude more departments from this budgetary effort, as Michel Barnier announced on Friday, traveling to Angers (Maine-et-Loire) on the occasion of the Congress of the Departments of France. Finally, Michel Barnier agreed on Friday to change the measure providing for the reduction of the rate of the VAT Compensation Fund (FCTVA) – investment aid –, promising to return “at a minimum” on its retroactive nature.

A reduction in the effort required of companies on employer contributions

The government wanted to tackle reductions in employer contributions to scrounge up four billion euros in savings. Interviewed on LCI on November 17, the Budget Minister said he “ready that only half, two billion euros, can be requested from companies”, and this “so as not to penalize minimum wage employees”, of which employers would then see “the cost of this work will increase.”

Already at the beginning of November, the Minister of Economy and Finance, Antoine Armand, said he wanted “mitigate” the increase in employer contributions on low wages planned in the 2025 budget, without quantifying this proposal, in exchange “other efforts” which may relate to working hours. After the Senate approved on Tuesday, in the PLFSS, a measure to reduce reductions in employer contributions which should make it possible to free up three billion euros to the detriment of employers, the Minister of the Economy, Antoine Armand, reiterated that “companies should not be the adjustment variable”, in an interview with Parisian. “It is not by bludgeoning businesses and increasing labor costs that we create jobs and growth”again noted the former Macronist deputy, adding that Michel Barnier had “always open the door to adjustments in return for savings proposals”.

A “compromise” on the deindexation of pensions to inflation

Among its savings avenues for 2025 and as part of its Social Security financing bill, the government had proposed to postpone the indexation of pensions to inflation by six months (from January 1 to July 1). , to save around four billion euros. The measure was sharply criticized, including among supporters of the Prime Minister’s coalition in the Assembly. Finally, it was the president of the Republican Right group (from LR) in the National Assembly, Laurent Wauquiez, who announced that he had found a compromise with the government.

“There will be an increase in pensions from January 1 for all pensions. It will be approximately half of inflation”declared Laurent Wauquiez on November 11 on the set of TF1. “On July 1, there will be a second increase, this time for the most modest pensions,” For “protect them completely from inflation”he continued, specifying that only those “below the minimum wage” would benefit from this second measure.

This partial revaluation will cost “between 500 and 800 million euros”reducing the expected savings to “around three billion euros”added the Minister of the Budget, Laurent Saint-Martin, on France 2.

An additional envelope granted to the Ministry of Justice

After declaring that he would not stay in government if his ministry’s budget was not improved, the Minister of Justice won his case. Didier Migaud announced on October 31 that he had obtained an additional envelope of 250 million euros for his ministry, as part of the 2025 budget project. An arbitration which partly reflects the cut of nearly 500 million contained in the initial draft of the executive.

This will allow, according to Didier Migaud, “to honor and respect all the commitments that have been made to magistrates, court clerks, assistant jurists, prison staff” during the vote on the programming law of the Ministry of Justice in October 2023.

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