what is a countercyclical measure?

Margaux Fodere

Months after the start of discussions, the Labor 2 law will be adopted today. Among the objectives of the government: to reform unemployment compensation on the principle of “countercyclicality”. But what is a countercyclical measure? Europe 1 takes stock.

Almost five years after the start of discussions, the Labor 2 law will be voted on definitively this Tuesday at 5 p.m. On the menu: a reform of the unemployment benefit based on “countercyclicality”. A somewhat complex name, but which actually designates a measure that goes against the economic cycle. This term comes originally from budgetary policies.

The principle is simple: in a period of recession, public spending is increased to limit the effects of the crisis and support the recovery. In times of growth, it is believed that the economy needs less support. So we reduce these same expenses to generate surpluses.

Encourage return to work

The same mechanism can be applied to unemployment insurance, following the example of the Canadian model. The idea for the government is to tighten the conditions of compensation when the economy is doing well, and jobs are to be filled. In return, the State relaxes these conditions when the situation deteriorates, and therefore when unemployment rises again.

Objective: to offer more flexibility by allowing, in one case, to encourage the French to return to work, and in the other, to better protect them in the event of a serious economic crisis, like that of 2008 or during the Covid-19 pandemic.