Since the onset of the health and economic crisis, many sectors (leisure, tourism, catering, hotels, events, non-essential retail, etc.) have suffered partial or total shutdowns in their activity. In the face of this unprecedented situation, Unédic moved to strengthen its conventional unemployment benefit mechanisms by setting up an extensive furlough scheme. And to cover the necessary funding, it chose to issue social bonds with the close support of Natixis.
Jun Dumolard, Head of Finance and Accounting, and Lara Muller, Head of Statistics and Research at Unédic, explain the impact of the health crisis on employment and talk about the measures introduced by Unédic to support the most vulnerable employees.
Discover the interview filmed in partnership with Loopsider.
What is Unédic?
Founded under France’s Law of 1901, Unédic is a not-for-profit association tasked with managing unemployment insurance in France from both regulatory and financial standpoints. It is run jointly by employees and employers, with each having an equal number of management representatives.
Using the furlough scheme to cushion the economic and social impacts of the crisis
The furlough scheme is geared to helping companies withstand temporary difficulties, whether of an economic or technological nature or caused by extreme weather or exceptional events. Unedic provides one third of the funding and the French government two thirds.
Due to the crisis and the associated lockdown measures, over one million companies have had recourse to the furlough scheme, i.e. two thirds of French businesses. All types of workers – employees, young workers, managers - and all sectors have been impacted.
The health crisis has been a game-changer
The unemployment benefit system was hard-hit financially by the crisis. Payments into the system shrank by around 12% in 2020: with less people working and more people looking for work, there is less money coming in to the system and more going out.
This situation forced Unédic to refinance on financial markets, in order to extend unemployment benefit rights and to cover the cost of the furlough scheme.
Using the financial markets to refinance
To deal with this exceptional crisis, Unédic turned to capital markets to issue social bonds as a means of reinforcing its conventional unemployment benefit mechanisms, while also supporting the introduction of furloughing. The promise of sustainable development linked to these bonds means the proceeds from the issue are devoted solely to funding social projects.
“Unédic’s engagement on the social issues market is consistent with the general interest of all our direct and indirect beneficiaries: companies, employees or job hunters. Issuing social bonds fulfils two major objectives: funding unemployment benefits without having to hike salary contributions and helping safeguard society from adverse fluctuations in the job market”, explains Jun Dumolard, Chief Financial Officer and Chief Treasurer, Unédic.
As a longstanding partner of Unédic across the full spectrum of classical financial products, Natixis provided close support to Unédic right from the start of the crisis, by structuring the framework for social issues and by preparing the social bond issues that followed.