Speech at Harvard University. 22 février 2018. How France Is Fighting Long-term Unemployment What an Innovative Experiment Can Teach Advanced Economies

Vous retrouverez ci-dessous mon intervention en intégralité prononcée aujourd'hui à l'Université de Harvard aux Etats-Unis pour présenter le projet "Territoires zéro chômeur de longue durée" : 

"Ladies and gentlemen,

It’s a great honor for me to be here today. I’m glad to present to you a project that I have been defending for several years, a realistic utopia.

I have begun to carry this project of economic, social and ecological transformation as a Deputy in the French Parliament, and I then chose to continue this fight in the civil society, as voluntary President of the NGO « territories without long-term unemployed ». Five years ago, I would not have been able to imagine that this utopia would become real, through a law, an experiment which is now taking place in ten territories. Indeed, I would not have been able to imagine that I would be here today, in one of the most prestigious universities in the world to present this project.

I would like to thank Professor Bill Wilson for this invitation, Arthur Goldhammer for his welcome, Niels Planel for his advice, and Pamela Metz for the organization. Also, kindly allow me to thank the French Embassy in the United States for their support, and the US Embassy in France, with whom I had regular contacts these last years on the issue of the employment.  Finally, a special thanks to my wife who has been supporting me from the beginning.

It was during a meeting with the French NGO ATD Quart Monde and the volunteer Patrick Valentin that I heard of this project for the first time. The idea consists in erasing long time unemployment by transferring its costs to social and local innovations. Coming from a humble background myself, I had always been concerned with unemployment issues.

« Territories without long-term unemployed »’s idea was founded around 1990 when unemployment was very high in France. The aim of reorienting passive spending made consensus, as Jacques Chirac defended it while he was President of France. But often thought as a windfall effect, this idea was rarely associated with an economic reflection resting on the creation of new activities.

When I discovered this idea, I told myself: Why haven’t we thought about it earlier? Unemployment rate was so high; everybody seemed to accept it as a fatality. In 1993, President François Mitterrand said: « We tried everything to fight long term unemployment ». Well, that was not true. « Territories without long-term unemployed »’s idea had not been tried before.

In France, long term unemployment is defined as being without a job for more than one year. In my country, this reality aaffects more than 2.5 million people, about half of the total unemployed population. Among them, more than 750 000 people have been unemployed for more than three years. And that doesn’t include people who are not taken into account in official statistics because they don’t believe in anything anymore and are not included in any way in the society.

Unemployment finds its roots in economic inequalities, transportation inequalities, knowledge inequalities, territorial inequalities, etc. To me, unemployment is not a choice. That’s why I speak about people deprived of job, rather that of "unemployed people" or "job-seekers".

It needs to be said that there are four trends in the French labor market:

-        Long-term unemployment is hard to fight, because the longer you stay unemployed, the hardest it is to find a job.

-        A strong job insecurity: 85 % of the recruitments are made on precarious jobs.

-        A polarization of the labor market: agriculture and industry decrease / services and transport grow.

-        Territorial splits between the urban / outer-urban and rural territories, between territories which benefit from innovations and others.

The principle of the project is simple: create or lean on companies of the social sector (including voluntary organizations) to create permanent employment contracts paid in the guaranteed minimum wage. These jobs are funded by reorienting the costs of the hardship of employment towards the financing of a local economy. The activities answer territories’ real needs, not yet satisfied because little solvent. Thus, they come in supplement of existing activities. On no account, they have to compete with the existing companies present in the labor pool. It can be re-localized productions or services. This stemmed from my view that it is time to be aware of human’s capacities and to trust local territories. 

Territories can offer their own answers to long-term unemployment. In the United States, you seized a long time ago the necessity of letting territories create their very own solutions. I believe that this awareness took place after the implementation of Lyndon Johnson’s Great Society in the 1960s. Indeed, this policy, just like the Job Corps, showed its limits because it was defined in a federal plan and was imposed in an identical way across the States. To be effective, the solutions have to meet the needs in the territory, they must be suited and piloted at a local level. With respect to employment and to vocational training, the example of Empower Baltimore is a good one or subsidized employment in Michigan. Indeed, it is not simple to trust and let territories do it their own way.

To experiment with this idea I had to convince the political majority of the time and also convince the President of France who was François Hollande at that time, to convince the other political groups, and I had to obtain the support of the biggest associations fighting poverty in France (ATD Quart Monde, Emmaüs France, the Secours catholique, the Civic Pact, and the Federation of the Actors of the Solidarity) and the expert Michel de Virville. On February 29^th, 2016, the law to reduce the long-term unemployment through a territorial experiment which I was the author of was discussed. Finally, all the deputies agreed to support it, it became a national consensus.

The law was voted unanimously by the French Parliament, which means in both the National Assembly and in the Senate. This unanimity created an undeniable dynamic on this project. After the passing of the law, I created the association “Territories without long-term unemployed” (TZCLD) with the NGO ATD Quart Monde, and in partnership with other associations such as Secours Catholique, Emmaus France, le Pacte civique and the Fédération des acteurs de la solidarité to expand and develop the project in its various stages.

 There were three objectives:

• Learn from the experience of the first territories in order to improve the method.

• Work with the volunteering territories to create a second experiment.

• Promote the project to create a right to participate by Act of law.

Following the implementing decree, and the choice of ten micro-territories that counts 5.000 to 10.000 inhabitants on the basis of a call for projects, the experiment was able to be launched at the beginning of 2017 for a duration of five years. In each of those ten territories, we created a company. The law did set up a fund for the experiments, organized as an not-for-profit to achieve more flexibility. Its Président is Louis Gallois. The public money, the welfare expenditures, pass in transit through this fund. This fund represents the annual cost of the long-term unemployment for the people who are targeted by the experiment. It counts 18 million Euros for year 2018. Every new company created in this context signed an agreement with the fund to get 17.000 euros per year and per individual employed through this experiment.

This project is based on three findings that suggest that it is economically feasible at a local level to get rid of long-term unemployment.

- First, money is not the issue. Long term exclusion from employment already costs more than 36 billion Euros per year in France! This amount includes the support to the long-term unemployed but also health expenditures for example. It is 35 % of loss of revenue (taxes and social contributions), 26 % of welfare expenditure, 19 % of spending bound to employment and 20 % of inherent costs: Social consequences of unemployment in the domains of housing, health, safety, child welfare, etc. It represents 17.000 euros by year and by person. The cost of unemployment covers 70 % of a minimum wage.

- Second, there is no shortage of work, but a shortage of jobs . A lot of tasks are not being fulfilled because they are not worth any money nor valued by our society.

- And third, nobody is unemployable. The unemployed have know-how and skills.

This utopia rests on several principles which establish our commitments:

-        Employment is a right. The preamble of the French Constitution indicates that each individual has "a duty to work ", but that each one also has "the right to obtain a job". This right is not applied to everyone, for instance to the poorest and to the most fragile.

-        Non-selection: we do not select the long-term unemployed people for the experiment. All those who want to participate can.

-        Stability: An open-ended contract is compulsory.

-        Non-competition with existing activities.

-        Exhaustiveness: propose a solution to all the long-term unemployed in the targeted territory.

-        Local consensus is possible in territories when it comes to a project that puts human beings at the heart of all choices.

To throw the experiment, it was necessary to conduct some preliminary activities by creating a local committee gathering all the local actors: local institutions, the State administration, the companies, the social actors, the associations, … It is necessary to underline that the territories which are the most dynamic in the experiment today are the ones that created a local committee before everybody else.

The local committee works on the basis of cooperation to establish a diagnosis on the needs of the territory and of the activities that can be developed. The committee also looks at ways to identify all the long-term unemployed in the targeted territory.

 Thus, the local committee has three objectives:

- Build and maintain local consensus around the project,

- Identify the long-term unemployed,

-Identify useful and new activities.

The small size of the chosen territories allows for the mobilizing of all the actors and to better identify the people who need to be targeted, to develop social mediations, and to define the new additional activities on the territory. The local committee exists because the market is incapable of solving the problem by itself. The committee has to build long, sustainable relations with the company created in the territory. There is no link of subordination of one upon the other, but the cooperation has the same purpose: generating employment opportunities.

Four stages are needed to succeed:

-        Creation of the steering committee and exhaustive mobilization of the local actors;

-        Identification of and meeting with the people durably deprived of employment in the targeted territory wishing to join the project,

-        Identification of useful activities on the territory,

-        Creation and identification of one or more company for the purpose of said employment.

As of February 2018, about 420 people were hired already on a long term objective of 2 000 people.  Four of the ten selected territories are city districts considered as in trouble (Paris 13^th district : Bédier Boutroux, Oudiné Chevaleret / Tourcoing : Phalemphins - Loos : Olliveaux / Thiers : Molles Cizolles / Villeurbanne : Saint Jean). Other territories are rural or outer-urban territories (Jouques, Country of Colombey and the South Toulois, Mauléon, Pipriac, Prémery, Colombelles). It is important to note that there is a disparity of income between territories if we take into account the median income. The median income is lower in urban areas than in rural areas. Four of the ten newly-created companies already have a staff north of 50 employees. One company in Burgundy even became the biggest company of the territory in terms of employed people.

The overall revenue of the new companies is 600.000 euros (or 745 000 dollars) after six months of activity, which is to say an average revenue per person of 3.000 to 4.000 euros, and it continues its rise in load with the deployment of new activities. The activities that are developed are very varied, and they respond to the unmet needs of the territory: exploitation of wood, market gardening in coordination with the local farmers, permaculture and short circuits, circular economy with the creation of recycling plants, activities of the interstitial type in relation with the artisans and small local businesses, development of local shops and services in connection with the existing traders, and activities related to energy transition, services to the person and concierge, activities which fall within the market economy but with a social tariff.

Businesses are organized around poles. Employees may move from one activity to another following the seasons, the needs and their desires. It is a business that is agile and flexible, where the management passes through the accountability of each employee, and the individual commitment is valued in order for all to succeed. In some territories, it is already envisaged to create a second company to develop additional activities and accommodate new people.

The costs of a job for each company are: 20.000 euros annually for the salary (including welfare costs); and 4000 euros annually for the costs of operation. The activation of passive expenses, paid for by the Fund of experiments, represents 18,000 euros. The revenue is currently 3.000 to 4.000 euros. Additional revenue needs to be generated by a company to cover the cash requirements and investments, and this is the most difficult challenge today.

Thus, a slowdown in the pace of hiring is currently observed, linked to the lack of a company’s limited funds. There is a difficulty in finding investors for activities that are by nature little creditworthy but which will become solvent over time. However, we need to invest and to get cash flow. The success of the experiment will also be judged in part on this access to the new investments.

But so far the experiment shows first and foremost that everyone has some skills that can be put to good use, and that savings are made by the fact that people are out of unemployment.

With this project, we reassess the value of work, designed as a source of income to ensure one’s conditions of subsistence, but also as a factor of social inclusion. Employment is much more than a simple job contract: It is at once an integral part of the social contract and a central element of one’s dignity.

Regarding the savings, the Fund of experiments collects the essential information regarding each individual on the allowances and subsidies one was receiving before his or her hiring. The first estimates in this regards are of 300 euros per month and per person. That’s a total of 3.600 euros. The additional revenue is estimated to be of 510 euros per month and per person, so that’s an extra 6.120 euros per year. Other savings on indirect costs such as health expenditures would need to be included. We are already seeing in some territories a decline in the number of food parcels distributed by charitable associations. Once the savings are fully accounted for, it will be necessary to conclude agreements with each national organization that achieves savings, because today it is the Government, without distinguishing between the entities concerned, that activates the pump.

For the evaluation, we will not only take into account quantitative elements, but also qualitative elements with for example new indicators of wealth.

The experiment brings security and stability to people who had none of it anymore since a long time. A company will make a commitment to the people to hire them back if they find a new job and are not happy about it. It is an additional security which helps to take risks for people who were met with difficulties in the past, people who often had many training courses which were supposed to lead to a hypothetical employment. While there, we are in the framework of a job-training, that is to say training during employment.

This experiment has obtained full recognition from the new President of the Republic, Emmanuel Macron. On January 25^th, I met with the Secretary General of the Elysée Palace to present the project and some possible extensions for the future. In addition, a new report that focuses on the great social project of this Presidency has included the extension of this experiment in its priorities.

Furthermore, 50 members of all political parliament groups have already given their support to prepare for a second stage. What could this second stage be? An extension of the experiment taking place in at least 50 new territories as early as 2019.

Today, the not-for-profit organization that I chairs accompanies new territories in France to prepare them in this regard. We want to convince public authorities to implement a second act that will deepen the experiment. A third step would aim at the creation of a so-called “right of option”, that is to say the possibility for any territory to be part of the experiment, without limitation in numbers. We also wish to extend this project to island territories such as Corsica, … and because we are without any doubt still utopian, we hope that this project can be experimented elsewhere in the world, anywhere where there will be good will and the desire to say: "No, we have not tried everything against unemployment!".

Economic growth does not benefit all and is accompanied by an increase in inequality within the richest countries. This project takes into account the fact that growth generates little productivity gains and negative externalities. Today, the least qualified are permanently on the brink of exclusion and this phenomenon is likely to accelerate with the technological revolution. As stated very precisely the American sociologist Richard Sennett, "I know a regime which provides human beings no deep reasons to care about one another cannot long preserve its legitimacy". Taking care of the other, putting human beings at the center of our choices, that is the whole point of this project. I will conclude my remarks with a quote from former French Prime Minister Léon Blum: "Any society that claims to ensure to men and women freedom, must begin by guaranteeing them their existence".

Thank you for your attention."