Debt-ridden France must spend less – but the socialist government is choosing to cut down on child benefits, a move that is seen as a direct attack on French families who are already facing heavier taxation and higher local rates since François Hollande came into office in May 2012.
The spending cut, which is expected to be approved by Parliament, aims to save 400 million euro in 2015 when the measure becomes effective in July, and 700 million euro per year from 2016 onwards – a fraction of the 2,000 billion euro debt of France.
With a fertility rate of less than 1.99 child per woman in child-bearing age in 2013, including all overseas possessions except Mayotte, France is one of the most prolific countries in Europe. But its birth rate is still lower than the required 2.1 child per woman to ensure generation replacement, and has in fact reached an all-time low since the end of World War I.
Demographic figures in France are less alarming than in Spain, Portugal, Italy or Germany where new generations are losing one person out of every three of the previous ones, but this has been largely attributed to France’s comparatively generous family policy and childcare system.
Compensation for family expenses was initiated by “social catholics” in the 1880’s, and the creation of the first mutualized professional fund to distribute child benefits took place in 1918. Promoters of the schemes underscored families’ contribution to the common good and presented them as “compensation” for the “social service” rendered by families to the nation.
The object of these redistributions was to compensate lack of spending power attached to a given salary between childless earners and workers with children. The idea was that a just income should take their extra expenses into account while not unduly burdening employers who would be tempted to hire childless workers.
The system first worked under the form of contributions to a common fund organized by regional employers: at the beginning of the 1930, more than 230 such compensation funds were active, with 32,000 businesses participating.
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The system was progressively nationalized and made universal: employers now pay rates on all salaries and a national fund distributes fixed child benefits to each and every family with two children or more under 20 years of age, to take into account the fact that whatever the income, having children brings down the standard of living as compared to that of childless earners with a similar income.
The program has always been seen as a measure of justice towards families and not of social redistribution. The benefit amounts to a monthly sum of about 130 euros for two children, and an extra 165 euros for each following child. The spending value of child benefits has fallen since the 1960’s, being progressively replaced by income-related social assistance, but no government has ever dared, until now, to challenge the “universality” of child benefits.
Even François Hollande during his presidential campaign gave his solemn promise to the National Union of Family Associations (UNAF) that the “allocations familiales”, or child benefits, would “never become means-tested benefits”: “I remain attached to the universality of child benefits,” he said.
Since then, tax breaks attached to the presence of children in the fiscal household have already been cut back. Maternity leave is also under government attack: in the name of gender equality, prolonged leave of three years for mothers of at least two children, with a relatively low state-paid allowance, will probably be cut back to two years while fathers will be offered the extra year’s leave – but few men are expected to take advantage of the new scheme, and heavily subsidized, expensive childcare will progress instead.
On Thursday, after a few days of uncertainty among government figureheads, it was finally François Hollande who decided that child benefits will be cut in half for all double-income families earning 6,000 euros or more per month, and reduced by three quarters for those earning 8,000 euros. These thresholds may seem comfortable. But in expensive cities, and for families who choose not to take advantage of the free – and secular – school system, they are not as rich as they seem.
According to some calculations a family with five children and an income of 5,000 euros has a standard of living comparable to that of a minimum wage-earner without children. Large families are also unable to save for retirement, while their children will be paying tomorrow’s pensions.
Mgr Jean-Louis Brunin, bishop of Le Havre and president of the “Family and Society” commission of the French bishop’s conference, has criticized the government’s move, saying that with the dismantling of child benefits the government “has crossed the red line.”
“You cannot make a society live without families, and families can only live in a context of confidence,” he said.
“The family cannot be considered as an adjustment variable for the economical policy of our country,” he added: “Will the State be telling us some day: ‘If you start a family, you’re going to pay the price?’”
What the government has not suggested changing is the child benefits system for public employees. Under their system the benefits are included in their salaries and represent a percentage added to the main income that increases with every extra child (3% for the second child, an extra 8% for the second and a further 6% for each following child) and comes on top of universal child benefits.