French President Unveils Incentives For Youth Training Contracts

by Ulrika Lomas, Tax-News.com, Brussels

28 April 2009

French President Nicolas Sarkozy has unveiled details of his ambitious youth employment plan, designed to promote professional training and to facilitate access into the job market for young people. The introduction of new fiscal and financial incentives will, therefore, serve to entice businesses in all sectors to conclude vital training contracts intended to benefit both parties.

Determined to stem the rapid rise in unemployment among young people, particularly affected by the prevailing global economic crisis, President Sarkozy has announced that his current priority is to invest in “la formation en alternance”, whereby individuals study while also gaining experience in a work environment.

Appealing to businesses to work together with the government, in their own interest, the President has revealed that his ultimate aim, between now and 2010, is to create an additional 35,000 apprenticeship contracts and 30,000 professional contracts or “contrats de professionnalisations”, whereby a certain percentage of the minimum wage is paid to the individual, depending on their age and particular level of qualification.

Key incentives for businesses are as follows:

Measures designed to promote apprenticeship contracts

Any company, irrespective of its size, which decides to recruit an apprentice before June 30, 2010, will be granted exemption from payment of French social contributions for one year. Up until now, this so-called measure of “Zéro charges” had only applied to companies with less than ten employees.

In addition, a one-off bonus payment of EUR1,800 will be accorded to companies with fewer than 50 employees, for every additional apprentice hired over the course of the same period.

Initiatives intended to support the development of “contrats de professionnalisations”

Any company opting to employ a young person – under 26 – on a professional contract, will benefit from a one-off payment of EUR1,000. This amount will be increased to EUR2,000 if the recruited individual has not successfully completed the French baccalauréat diploma.

Measures to facilitate access to the work place

Henceforth, any work experience will be remunerated after two months – previously this was the case after three months.

Endeavouring to encourage the use of temporary contracts, an exceptional one-off payment of EUR3,000 will be granted to any business electing to issue a temporary contract – before the end of September 2009 – to any young trainee on work experience before April 24, 2009.

The French President’s youth employment plan is thought to cost around EUR1.3bn and to affect in the region of 500,000 young people – qualified or unqualified. The plan is to be financed essentially by the State via the social investment fund, created in February of this year specifically in order to develop training.

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