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About the French
family policy
Henri Sterdyniak
Economist at the OFCE
UNAF-COFACE, April 12th 2018
22
One quarter of the French population were below 20 years old.
To ensure income parity. family policy should transfer approximately
11.5% of the household income.
The treatment of families by the tax-benefit system is crucial the
social equity.
Two traditional objectives: to avoid children poverty ; to give the same
level of income to families, with or without children (horizontal equity).
One other objective : to conciliate children care and professional
career, especially for women.
Fertility is also a preoccupation, but family policy is needed without
this preoccupation.
About the French family policy
33
The French family policy is globally a success if we look on the
fertility rate and on the women participation to the labour market.
Nevertheless, families remains poorer than couple without children ;
the children poverty rate is to high.
The FFP is now menaced by
- the anti-family rhetoric of some feminist movements
- the public expenditure reduction policy ;
- the temptation to change the family policy from an universal policy to
a social policy (targeted on the poorer).
About the French family policy
44
The family policy principles
Many contradictory principles can be implemented.
The horizontal equity principle : families with children must have the
same level of living that people without children, with the same primary
resources. Family policy must be independent from the social policy
(the redistribution from the richest to the poorest). This system accepts
the inequality between the children.
The ultra-egalitarian model : the society must provide the same
income to every child. But it is impossible if children live with parents
with different income level.
The egalitarian model : the society must provide the same help to
every child. But what level of benefits?
The assistance model : each child must have a minimum standard of
living. Family benefits to families are concentrated on the poorest,
middle-class children being at the sole charge of their parents who are
poorer than their colleagues without child.
55
Assistance model : means-tested benefits (housing benefit,
complement familial, school benefit, minimum income, revenu de
solidarité active, Activity bonus, Prime d’activité) ; reduced rates (for
canteens, nurseries, out-of-school activities).
Egalitarian model: uniform family allowances, free education and
medical coverage.
Horizontal equity model : the family quotient for taxation
French family policy is therefore in principle a fair policy,
differentiated according to the needs of different families.
The French system is a balance between these models
66
The targeting temptation.
Targeted social assistance are less expensive than universal ones.
During Holland Presidency, the government has reduced family allowances
for the middle class and has lowered the family quotient ceiling.
This can be considered a left-wing politics, but family policy becomes an
annex of social policy.
Targeted benefit are socially fragile and run the risk of a two-speed society:
those who pay taxes and those who receive benefits.
Benefits for the poor become rapidly poor benefit
The targeting induces threshold and stigmatisation effects.
77
Family policy and pro-natalist issue
Family policy is justified by the principle of the French social model.
The tax and social treatment of families must be fair, regardless of any
pro-natalist considerations.
Europe is characterized by very low fertility rates.
In 2016, 1.35 children per woman in Spain. Italy and Portugal ; 1.4 in
Poland and Greece ; 1.5 in Slovenia and Hungary; 1.55 in Austria and
Bulgaria ; 1.6 in Germany and Finland ; 1.65 in Romania. Czech
Republic and Netherlands; 1.7 in Belgium ; 1.8 in Ireland. Denmark and
United Kingdom ; 1.85 in Sweden ; 1.9 in France.
88
Family policy and pro-natalist issue
France stands at 1.9 children per woman, i.e. above the European average,
1.6; this comparative advantage must be protected.
France must avoid any reform that would indicate that society does not have
the concern of the family.
The fertility rate was 2 children per woman in 2014; It fell since 2015 to 1.88
in 2017, while it had resisted to the rise in unemployment since 2007.
It is difficult not to make a link between this decline in the French birth rate
and the policy of reducing aid to the families of Holland presidency.
99
Some feminist movements advocate the individualisation of taxation and
social protection.
1) To ensure the autonomy of women
2) To encourage women to work
3) The society should not interfere with the private choices of individuals
But
1) It would hurt mono-active families and inactive women (removal of
reversion pensions).
2) It would complicate the redistribution (how to define the family income
level?) and the assistance for single women with children
3) It would makes difficult a coherent treatment of children.
4) It refuses to take into account family solidarity (removal of alimony).
On the contrary, one may think that the family solidarity should be
reinforced. Parents must provide their children with the same standard of
living as theirs (which means for instance an increase of children alimony
after a divorce).
Individualisation versus familialisation
1010
Median Disposable income in 2015 by consumption unit (euros by year)
Source : INSEE (2017).
Active man single 19 330
Active woman single 19 400
Active woman single with children 15 320
Mono-active couple 23 820
Bi-active couple 26 990
Mono-active couple with children 15 070
Bi-active couple with children 21 930
1111
In 2017.
1. Employers social contributions : (5.25 points above 3.5 SMIC, 3.45 below) : 30.4
billions
2. CSG (a flat-tax on households income. : 10.1 milliards.
3. Taxes transfers (incluing compensation of social contributions exonerations) : 7.8
milliards
The CNAF has a surplus of 0,5 milliard. 1% of employment missing cost 0,4
milliards à la CNAF. In 2017, 4% are missing
The CNAF finance pension contributions for parental leave (5 billions) ; family
pension supplements (4.8 billions). It do not finance anymore housing benefits.
Each year the Social Security Administration (a ministerial direction) changes the
distribution of taxes between the different regimes to arbitrarily distribute deficits and
surpluses.
As family benefits are indexed only to prices while contributions increase like wages,
the family branch has a trend surplus that the government uses to lower
contributions, to finance other branches and (sometimes) to improve certain
benefits.
Who finance the family branch (the CNAF) ?
1212
The Government has promised to the MEDEF (the employers
organization) to remove the employers social contribution for family
(35 billions).
Social logic would dictate a funding by the CSG (a flat tax on all
income) or by the income tax.
But, the transition is delicate. A transfer towards firms by replacing
the ESC by the CSG would weigh too much on households.
Some suggested to replace the ESC by an increase of VAT, but the
impact would be strongly inflationist
1313
To compare the situation of different households
To compare the situation of families of different sizes, the society should
define an equivalence scale, that is to assign to each type of family a
number of consumption units (CU)
This method has no theoretical basis. There is no comparability between
a person and a family. A person who marries and has children change its
utility function. But the society is obliged to define such a scale.
The old OECD scale had 1 for the first adult ; 0.5 for the second person
and children over 14 years ; 0.3 for children less than 14 years old.
The new OECD (or INSEE) scale has 0.5 for the second adult and
children over 14 years ; 0.3 for those under 14 years.
The RSA scale is close to the old Oxford scale ; the FQ scale is less
generous for single and more generous for large families.
1414
Consumption unit, familial quotient and minimal quotient*/**
old. OCDE /
OCDE -INSEEFamilial Quotient RSA
Single, no child 1.33 1 1.33
.... With 1 child 2/1.80 2 2
.... With 2 children 2.45/2.25 2.5 2.4
Couple, no child 2 2 2
.... With 1 child 2.45 2.5 2.4
.... With 2 children 2.9 3 2.8
.... With 3 children 3.35 4 3.33
.... With 5 children 4.25 6 4.40
**scaled at 2 for a couple without child ; ** 25 % children above 14y.
1515
To compare the situation of different households
Many recent studies try to evaluate the right CU.
Three methods: standard budgets, the comparison on the part of some
spending in the budget (food, adult clothing, ...), subjective methods.
For a synthesis : HCF (2015) : « Le coût de l’enfant »
According to the New OCDE scale, a child represents 0,23 CU (with 2 for
a couple) ; according to Hourriez and Olier (1997), 0,22 ; according to
DREES (2011) , 0,32.
For the ONPES report (2015), a child average cost is 740 euros by
month, which means 0,37 CU.
For Martin and Perivier (2015), a mother + a child represent more CU
than a couple. A child cost would be 500 euros by month for low-income
family (an CU of 1.2), with a ceiling of 1000 euros par month below a
income of 4300 euros (an CU of 0.24).
1616
Transfers for families
In 2015, transfers to families accounted in for 50.5 billion euros, 2.3 % of
GDP, 3.7% of households disposable income, 257 euros by month.
This figure is the result of many conventions: it includes only transfers for families w
induced by the presence of children. It therefore not includes spending for maternity
other than the maternity bonus ; It only includes the supplements of RSA and
housing allowances induced by the presence of children. The family quotient
corresponds to the principle of family tax equity. We only included the extra half-
share for the children from the third. It does not include spending of the nursery
school (because why not then include all expenditures teaching?). It does not
include benefits for old age (pension supplement), who do not benefit for families
with children.
A wider convention could go up to 202 billion, 4.65% of GDP.
1717
Family policy in 2015, bilions
Strict definition Large definition
Allocations familiales 12.9
Allocations sans conditions de ressources (ASF,..) 1.5
SFT 2.8
Allocations sous conditions de ressources (CF, AB) 6.0
ARS et Bourses scolaires 3.0
Maternité 0.4 3.8
CLCA 1.8
PAJE Garde 6.1
Aide sociale à l’enfance 9.1
Allocation logement lié à la présence d’enfant/AL Total 4,0 18,1
RSA lié à la présence d’enfants / RSA total 3,5 13,0
Dépenses fiscales.
-Taxe d’habitation 2,9
-Quotient familial 0.9 10.8
-Réduction d’impôt pour frais de scolarité ou de garde 1.6
-Contribuables ayant eu des enfants à charge 0.6
-Avantages familiaux retraites 8.0
-Fonctionnement crèches 6.0
Total pris en compte/Total étendu 50.5 102
1818
Youth less than 20 years represent 25% of the population. Using the scale of
the OECD. It is 11.5% of the income of households that should be provided by
family benefits to ensure the same level of life to people without children to
families with children. However all the benefits under family criteria represents
only 3.7% of the household income. Family parity is not assured. Benefits
should be multiplied by 3.
From 1984 to 2017, the purchasing power of family allowances declined by
3.8%. The BMAF (Family benefit index) was worth 33.6% of the median income
in 1984; 24.4% in 2017, a decrease of 27.4% in relative value.
In the long term. the degradation is even sharper. For having the relative level of
1954. 2 children benefits should be 527 euros per month (instead of 130 ); for 3
children, 888 (instead of 465 with the family complement, 296 without).
1919
Family benefit
index (BMAF)
Purchasing
index
BMAF/
median
income %
1984 102.0 33.6
1990 100.7 31.1
2000 100.0 28.3
2005 98.1 26.4
2010 98.0 25.0
2015 98.5 25,2
2017 98.0 24,4
.
2020
From 1990 to 2008. the relative decline in the old allowances (allowances
family. family supplement) has funded the rise of the school benefit, of the stay-
at-home allowance or of the child care allowance. The family policy was
stripped for the benefit of the employment policy. whether to encourage women
to stay at home. or on the contrary to encourage them to work.
The share of family benefits in GDP : a slow decrease
1990 1995 2000 2008 2015
Santé 9.1 9.7 9.7 10.3 11.2
Vieillesse 11.3 12.6 12.4 13.4 14.6
Famille-Maternité 2.9 3.1 2.9 2.6 2.5
Emploi 2.3 2.3 2.0 1.7 2.0
Logement-Pauvreté 1.0 1.3 1.3 1.2 1.8
Total 26.5 29.0 28.3 29.3 31.9
Share of social benefits in GDP
2121
Some specificity of the French benefit system
Family allowances (allocations familiales) are universal. But they vary
according to the rank of the child: 0 for the first, 130 for the second, 166
euros from the third. This difference makes sense if the objective is to
ensure a certain standard of living for all children as families with several
children are poorer than families with only one child. They are indexed
only on price.
From 2015, family allowances are divided by 2 (if the monthly family
income exceeds a certain threshold, 5628 euros for a family with two
children) or 4 (beyond 7502 euros).
The complément familial (237 or 169 euros per month depending on
resources) is a means-tested benefit paid to families with 3 children and
more. It is a survival of a allowance (the Salaire unique) paid to mono-
actives families.
22
Nombre d'enfants fiscalement à charge Ensemble Aucun Un enfantDeux
enfants
Trois
enfants
Quatre enfants
et plus
Ensemble 23 440 24 850 23 170 22 710 20 270 16 040
Ménages d'une seule personne 21 560 21 560 . . . .
Homme seul 22 170 22 170 . . . .
Femme seule 21 100 21 100 . . . .
Familles monoparentales 16 780 18 420 17 710 15 450 13 640 11 970
Couples sans enfant 28 180 28 180 . . . .
Couples avec enfant(s) 23 460 25 080 24 920 23 930 21 060 16 630
Ménages complexes(1) 20 330 21 530 18 230 18 200 18 300 ns
Niveau de vie annuel
moyen des individus
du ménage
Income supplement by child (family with 2 children and 1,33 average
wages).
Tax reductions Family benefit Total
Austria 13 212 225
Belgium 48 158 207
Denmark 157
Finland 5 101 106
France 78 65 143
Germany 204 204
Italy 59 39 98
Japan 76 76
NL 73 80 153
Spain 22 22
Sweeden 131 131
UK 84 84
USA 124 12423
2424
Aids for young child care are important. The allocation decreases according
to the family income ; in addition, the families receive exemptions from social
security contributions and tax aid. The effort rate decreases according to
family income.
The 57 percent of children under 3 years are kept (33% by a child minder,
18% in a nursery (crèches), 4% the pre-school (école maternelle), 2% by an
employee at home). The aim is that children from low-income families attend
nurseries, but the development of these is limited by their cost for local
finances.
The PreparE (prestation partagée d’education de l’enfant) allows parents to
stop to work when their children are less than 3 years. It is not under means-
tested, but can only interest women with low-wage (392 euros per month). It is
less true for part-time work (146 euros for 50 to 80% of a full time, or 254
euros less than 50% of a full time). It can last 6 months by parents (1 child) or
2 years by parents (from the 2nd). It was used only by women (which stopped
working during 3 years); so, the Government now imposes a sharing between
parents, which induced not more use by fathers, but less use by mothers.
With 3 children, the PreparE majorée is better paid (640 euros), but it is
limited to 8 months for each parent.
2525
Net expenditure/Income ratio / Net expendidure
in euros par month en 2017
Child minder At home care Nursery
1 SMIC11.4 %
153
61.4%
821
4,3%
57
2 SMIC12.1%
302
39.9 %
992
4.3%
113
4 SMIC9.1%
418
24.1%
1108
7.9 %
362
6 SMIC6%
418
16.0 %
1108
5.4%
377
2626
Housing allowances strongly help families with low incomes: for instance,
360 euros per month for a family, with 2 children, 300 euros with one child
instead of 160 euros, without children.
The RSA (revenu de solidarité activité) guarantee a minimum income
which increases with the size of the family according to the old OECD
scale. The RSA suffers for a high non-take-up rate (35%).
The Prime d’activité is given to families with low income. It is calculated as
the :
RSA-0.38 (activity income)-(other incomes)+ work bonus. The work bonus is
67 euros for each active parent.
The non-take-up rate is lower (22%).
Housing allowances
La question du logement 27
2828
Some problems
The system of family benefits has little coherence. The universal benefit is
low; new allocations are means-tested ; supplements seem to be
distributed randomly. There is no consistency between RSA, Prime
d’activité and family allowances.
Benefits are not indexed on wages. but prices, which reduces
progressively the relative level of the benefits.
Can the system of benefits depending on the number of children be
maintained with the development of shared custody and stepfamilies?
Three benefits target poor families: the RSA-Prime d’activité, housing and
allowances and complement familial.
2929
The situation of the 20-25 years
Family allowances ends at 20 years.
20/25 years can be:
- Students. They can be taxed with their families until 25 years. They can
receive a scholarship depending on the family income. They can receive a
housing allowance if they leave their parents domicile. Some work. Most
are financed by their families.
- Workers. They are entitled to the Prime d’activité
- Unemployed. They have no allocation. They can be taxed with their
families until 21. For the RSA. they are attached to their family up to 25
years; their income is deducted from the family RSA.
3030
The situation of the 20-25 years : 5 projects
An autonomy allowance to all: very high cost (24 billions for 500 euros by month
during 5 years). It would be difficult to help the students and not the young
workers and unemployed. The removal of the QF (familial quotient) after 20 y is
not enough to finance this allocation.
EWL (entry into working life). Measure for young people from low income families
with low incomes, financed by the removal of the QF for the richest families.
Unfair, because of what are supposed to live young people from these families?
A right at the RSA since 20 years. Disincentive to employment. How to check that
the young is in trouble, that he is not a student? In 2009. the RSA has been
extended to young people who have worked for 2 years.
An insertion allowance. For unemployed young people. There are 580 000
unemployed at this age (7% of 15-24 years). The cost would be a maximum of
3.5 billion euros for 500 euros per month.
Increase scholarships to students from modest families. We cannot provide 22
billion euros by empower all young people 20 to 24 years. We have to accept
that young people from easy or medium-class families remain upon the
responsibility of their parents. We need to focus aid on the students from poor
family.
3131
Family and taxation.
France practices the family quotient system (FQ), which is the only
consistent with the principle of horizontal equity principle. At every family
is assigned a number of part P and the family is taxed as P singles with
income R/P.
The family quotient does not provide any help or specific benefit to
families. It only ensures that the taxation is equitably distributed between
families of different size, but with equivalent level of living.
The family quotient is the counterpart of the maintenance obligation, the
fact that parents have to provides the same level of life than themselves
to their children.
According to Sophie Ponthieux (2011), 64% of couples share totally their
resources in common and 18% partially. Total pooling concerns 74% of
married couples; 67% of couples with children; 75% of couples with an
inactive person.
3232
The main criticism made to the tax familialisation is that it interfere with the work
of women. In a couple where the wages are very different, the marginal rate of
the woman (assumed the less well-paid) is higher than the rate to which she
would face if she was single.
The activity rate of 25-55 years women is relatively satisfactory in France. Care
facilities (financial assistance for the care of young children. nursery school,
preschool) allow to combine a high level of activity and a satisfactory level of
fertility.
The increase in disposable income as a result of a return to work is much
stronger for a married woman than for a single woman, much stronger for
taxable couples (who do suffer from an income tax) than for a precarious
couples (who lose housing allowances and RSA).
3333
Activity rate 25-55 y in2016En %
Men Women Discrepancy
Discrepancy
in full-time
equivalent
Sweden 93.3 88.4 4.9 7.6
Finland 89.7 82.8 6.9 9.4
Denmark 90.8 83.8 7.0 10.3
France 92.7 83.1 9.6 15.5
Spain 92.5 82.3 10.2 16.2
USA 88.5 74.3 14.2 17.2
Austria 91.8 84.9 6.9 17.7
Belgium 90.4 79.8 10.6 19.4
Germany 92.0 82.7 9.3 20.4
UK 92.3 80.1 12.2 21.9
Ireland 89.2 73.7 15.5 23.0
NL 91.7 82.2 9.5 25.5
Japan 95.5 76.3 19.2 27.7
Italy 88.2 66.8 21.4 28.6
Source : OECD, Active population statistics (2018)
3434
Gain from a work at the minimum wage
Single women
No child 511 euros
2 children 555 euros
Married no child
No work 558 euros
Husband SMIC 681 euros
Husband average wage 1001 euros
Husband 5 average rates 705 euros
Married 2 children
No work 618 euros
Husband SMIC 449 euros
Husband average wage 1001 euros
Husband 5 average wages 828 euros
3535
The gain provided by the family quotient was capped at 2301 euros per
half share until 2012. The ceiling has been lowered to 2000 euros in
2013, then 1500 (125 euros per month) in 2014. Now it is at 1527 euros
(127 euros per month).
The ceiling can be justified (above a certain level. income is not used for
the children's expenses), but its amount is arbitrary. It follows inflation and
no income. It would be preferable to fix it according to a justifiable rule
and to indexed it on the median income.
In 2018. the median income should be 1 778 euros by CU by months,
which mean for a child (0.35 CU on average). 622 euros. If a child cost
622 euros per month to an average family with two children (including 65
supported by family allowances), It is legitimate that the tax cut ceiling for
upper-middle income families : (622-65) * 12 * 41% = 2740 euros.
3636
Some tax reduction given to households can be considered as tax
expenditures. It is the case for the additional half-part children since the
third and for the non-taxation of family allowances. These devices
support the richest among the people considered. But the people thus
favored are those who lose the most relatively by having children.
The French system is not entirely satisfactory because the weight of the
Income Tax, the only progressive tax is too low: 3.3% of GDP against
5.2% for the CSG (a flat-rate contribution) and 10.4% in the average of
the EU (in 2015).
On average, families are poorer than couples or singles. To increase the
weight of the Income tax would make the system more progressive and
more family friendly.
3737
A radical reform would be to remove any reference the number of children in the
calculation of the tax and to use the money "saved" to increase family
allowances: 62 euros more by children per month.
The reform look progressive: one take from the rich to give to the poor. But it
leads to overtax the only rich families with children, and not all the rich.
The society may choose not to help well-off families. It does not have the right
moral as constitutionally to overtax families with children compared to people
without children with the same standard of living. Each family must be imposed
according to its ability to pay.
The project to remove the QF and use the money saved to increase family
allowances (and give them to families with a child) was promoted in March 2018
by a MP (from En Marche), Guillaume Chiche. He also proposed the family
allowances decreases more quickly with the family income. It is the targeting
temptation. Happily, he was not followed by the Government.
3838
The balance of redistribution.
The insufficient level of family benefits explains that children under the
age of 18 have a standard of living lower than the average of the
population. This also affects the standard of living of their parents (the
30-49 years) compared to the 50-69 age.
All families, either receive the RSA, the Prime d’activité, the housing
allowance, either pay the income tax, so are subject to a progressive
transfer. The Government has the necessary instruments.
Couple with 3 children (2,4 CU) euros by month
39
* Income by CU relatively to the income by CU of a couple without child
Unemployed SMIC 2 active parents
RSA inactive inactive 1,5*SMIC 2*SMIC 3*SMIC 5*SMIC 10*SMIC
Wages 0 890 1144 1 716 2288 3432 5720 11 440
RSA 692+32 – – – – – – –
PA – – 324 107 – – – –
AF/ARS 295+92 295+92 295+92 295+92 295+92 295 295 74
CF 219 219 219 219 169 169 _ _
HB 550 520 451 307 159 – – –
IT 0 0 0 0 0 0 – 95 –1736
Total 1880 2016 2525 2736 3003 3896 5920 9778
%MI 47,0 50,4 63,1 68,4 75,1 97,4 148,0 244,4
* 111,9 108,4 98,2 95,4 82,0 75,7 73,0 66,4
4040
Income by age in 2015
Average income Median income
Below 10 88.5 91.3
10 -19 89.5 88.5
20-29 89.3 93.8
30-39 96.0 101.4
40-49 100.7 101.7
50-59 114.1 111.5
60-69 114.9 109.7
70-79 107.9 105.8
Above 80 100.9 95.5
Ensemble 100 100
Income by CU by children numbers. Average 100
Average income Median income
Single 91.2 90.8
Couple 0 child 120.2 117.5
Single 1child 75.6 76.1
Single 2 children 65.9 69.2
Single 3 children 58.1 60.4
Single 4 children + 51.0 52.3
Couple 1 child 106.3 109.2
Couple 2 children 102.1 103.7
Couple 3 children 89.9 89.4
Couple 4 children + 70.9 67.0
41
Median income by family types
0 child 1 child 2 children 3 children +
Active man 97.7 93.3 81.6 72.7
Active Woman 92.7 78.7 69.2 65.6
Inactive W 76.7 58.4 48.9 45.5
Couple 2 A 134.0 117.9 110.7 99.5
Couple 1A 117.2 89.2 77.5 64.8
Couple 0 A 104.5 81.5 59.6 47.0
42
4343
The families situation
Let us look on child net gains, assuming that the reduction of income tax is
part of these gains. Per child aid depend strongly on the number of children:
children of large families provide a larger gain. Earnings present a U curve.
There is a hole for families of low and middle income (1.5 to 5 SMIC) with 1
or 2 children. The benefit should increase sharply for families with 1 or 2
children, earning the minimum wage or 1.5 minimum wage. On can save on
subsidies to upper-income families, especially large families. There is a
specific issue for the family of unemployed workers as the family loose the
Prime d’activité.
Either one compares the levels of living of families according to their number
of children. In that case, the parity of the standards of living between families
and individuals without children is ensured at the level of the RSA and at the
minimum wage. For 1.5 to 10 minimum wage workers, the standard of living
is a decreasing function of the number of children. There is no more curves in
U. There is little reason to give more families with 1 child and less to many
families with several children.
The gain in income by child, in 2016, euros by month
RSA Un-employed
SMIC 1,5 SMIC
2SMIC 3SMIC 5SMIC 10SMIC
2 children* 350 292 342
1 child 214 122 200 202 0 60 125 125
2 children 235 175 265 272 149 172 158 142
3 children 277 285 306 321 238 226 283 192
44
* single
Income par CU : Family/couple without child=100
RSA Unem-ployed
SMIC 1,5SMIC 2SMIC 3SMIC 5SMIC 10SMIC
2 children* 118 98 95
1 child 100 92 94 92 83 85 85 85
2 children 103 94 95 92 81 79 76 74
3 children 112 108 98 95 82 76 73 66
45
* Single . In red Below the poverty line.
4646
The RSA and the Prime d’activité significantly improve the situation of
working poor families with 1 or 2 children. but :
1 The non-take up of is important, 35% for the RSA, 22% for the Prime
d’activité.
2. The unemployed worker do not received the Prime d’activité. Paradox: the
Prime d’activité decreases the net replacement rate for low-wage employees.
Unemployment benefits should have the same status as wages in the
calculation of the Prime d’activité.
On the one hand, the family parity is not assured for almost all level of
income : families with children have a standard of living lower than people
without children.
On the other hand, the system provides relatively large aids to families; It
provides family parity for low income, a sensitive aid for the families at lower
salaries, aid which is reduced in proportion when income increases. At any
level of income, it appears families too privileged or too overloaded.
4747
About children poverty
Poverty is defined as having an income by CU below a certain percentage of
the median income: 50% or 60%
Global Below 18 y
Level 50% 11.1 % (5.02 mil.) 8.0 % (1.55 mil.)
Level 60% 14.2 % (8.88 mil.) 19.9 % (2.78 mil.)
Poverty rate in France in 2015
4848
The poverty rate is more important among children and young people than
among the active and the retired.
The children live with potentially active parents, that the society refuses to help
too if they are unemployed to incite them to find a job. The RSA is below the
poverty line, unlike the old age income. This increases the rate of child
poverty. For families with children, the RSA does not get out of poverty, but
one minimum wage is needed
The highest poverty rate of children is a general feature in Europe: only
Denmark and Finland escape. But the gap is high in France .
Three explanations for poverty: single-parent families; large families which are
often mono-actives; exclusion and poverty (unemployment, partial-time work,
precarious work).
49
Poverty rate at 60 % in 2015
Global 14.2
Below 18 y 19.9
18 -29 y 20.1
30-39 y 13.0
40-49 y 13.7
50-59 y 12.6
60-69 y 7.6
above 70y 7.4
Poverty rate according to the family type (2015)
Global 14.2
Single 15.5
Mono-parental family 32.7
Couple no child 6.0
Couple 1child 9.0
Couple 2 children 9.7
Couple 3 children 23.8
50
5151
Poverty rate 2016 60 % threshold
Total 0-18 ans 18-24 ans
Euro zone 17.4 20.8 23.6
Finland 11.6 9.3 26.9
Denmark 11.9 9.4 39.4
NL 12.7 14.8 24.9
France 13.6 19.1 21.9
Austria 14.1 16.5 19.8
Belgium 15.5 17.8 20.8
RU 15.9 18.5 19.6
Sweden 16.2 18.7 29.9
Germany 16.5 15.4 21.0
Ireland 16.6 18.9 21.4
Portugal 19.0 22.4 23.2
Italy 20.6 26.7 25.7
Greece 21.2 26.3 29.0
Spain 22.3 29.7 31.3
Family policy: recent developments
Since 2012, Governments have the objective to reduce expenditures of the
family policy as a contribution to the public deficit and public spending
reduction.
Strong declines in benefits for middle-class families are justified by increases
of lesser magnitude of benefits for the poorest.
The Government has therefore decreases the level of the ceiling of the FQ.
first from 2336 Euro to 2000 euro in 2013, then 1,500 euros. In 2014, family
allowances have been divided by 2 or 4 for families above certain levels of
income. The loss of income is 204 euros (or 236) for families with two
children, 458 (or 548) for families with three children, approximately 3,5 and -
6.5%.
Allowances for the poorest have increased 800 million, those for the rich fell
by 3 400 million. A saving of 3,8 billions (if one add the taxation of family
pension supplements).
If we compare the evolution of benefits and GDP, from 2012 to 2018, family
benefit lose 1.9 billions, young child benefits 2.7 billions, housing benefit 2.3
billions. So, the saving on families reaches 6.9 + 2.8= 9.7 billions52
Impact of 2012-2015 reforms on middle-class families
53
Euros by month couple 2 children 2012 2 children 2015
Wages 6 000 6 000 6 000
Taxes -864 -864 -389 -864-250
Family benefits 130 65
Disposable income 5 136 5 655 5 451 (-3,6 %)
Income by UC 3 424 2 570 2 478
% family/ couple
income by UC
75,07 72,36
couple 3 children 2012 3 children 2015
Wages 7 000 7000 7 000
Taxes -1 164 -1 164 -778 -1 164-500
Family benefits 360 180
Disposable income 5 836 6 974 6 516
Income by UC 3 890 2 734 2 555 (-6,5 %)
% family/ couple
income by UC
70,3 65,68
Financial effects of financial policy reforms since 2012 in millions. Taxes Benefits
2013
Decrease of the FQ ceiling (from 2336 to 2000 euro) + 560
Increase by 25 % of the Allocation de rentrée scolaire +380
2014
Decrease of the FQ ceiling (from 2000 to 1500 euro) +1 000
Taxation of family pensions supplement +1 200
Decrease of the CLCA -190
Decrease of Prestation d’accueil du jeune enfant. -550
Increase of the Complément familial +400
Increase of the ASF +350
2015
Parental leave reform -290
Family benefit reform -800
2018
Increase un childcare subsidies/ PAJE reform +40/-400
+1 560 +820 /-1880
54
5555
The great reform (?)
To replace (AF + CF + QF + PAJE of base) by a uniform benefit at constant cost
would give about 165 euros per child.
This reform is recommended by Landais, Piketty, Saez (2011) and Léon Régent
(2018). The reform would be unfavorable to richest families, one-parent families,
families with many children.
What should be the level of an uniform child allowance? In 2018, the median
income is 1 778 euros per month. So, for a child to 0.35 share of CU on average
(0.3 for the under 14 years ; 0.5 for more than 14 years), the median income 622
euros. either the income corresponding to 60% of the median income 373
euros.
The sum of 165 euros is much lower than the average cost of a child euros 622:
who pays the difference? The parents, of course. Why this charge would not be
taken into account in the calculation of the IR ? How will be calculated the
alimony if the 165 euros are supposed to cover the cost of children?
A uniform allowance must be strong enough to totally offset the cost of the child
to poor families and to justify that children are not taken into account with the
richest. Countries that have the strongest family allowances do hardly exceed
150 euros per month (212 in Austria, 158 in Belgium, 157 in Denmark)
5656
The great reform (?)
In 2019, France will move to a withholding system from its
income tax.
It is the company that will deduct and collect the income tax on
the wages of its employees.
It was feared that, in order to simplify tax collection, France
would move to an individual tax system.
Fortunately, this is not the case; the tax will remain family
based.
Income supplement by child (family with 2 children, income 1.33 average wages,
euros by month)
Tax reduction Family benefit Total
Austria 13 212 225
Belgium 48 158 207
Denmark _ 157 157
Finland 5 101 106
France 77 65 142
Germany 204 _ 204
Ireland _ 140 140
Italy 59 39 77
Japan _ 76 76
NL 72 80 152
Spain 22 22
Sweden _ 131 131
UK _ 84 84
USA 124 _ 124 57
5858
An other project
1. Family allowances and the family quotient would be delete.
2. A means-tested benefit would remain for the poorest families.
3. Saved funds would finance the young children car, the education of
the children of the precarious families and collective services for
children.
4. It is the bi-activity (by the women work) that would ensure the
standard of living of families.
5. But, in this system, families with children would be much poorer
couples without children. It forgives horizontal equity. It supposes that
women would have no difficulty to find a work.
5959
Which reform ?
Family benefits and the RSA should be indexed on the minimum wage
(or in the median income) in order to maintain their relative value.
A family supplement should help families of low wages with 1 or 2
children.
The RSA should be given to families, with unemployed parents.
The weight of the income tax should be increased, and the weight of the
CSG should be reduced.
Below a certain income level, canteens, out-of-school activities and health
care for children should be free.
A free public 1-3 y children care service should be instituted.
In the short term, the increase of places in nurseries for child from poorest
families should allow to give every child the best chance for be well-
educated
Extend family allowances to families with 1 child (cost: 2.6 billion) is not a
priority.
6060
Which reform ?
An insertion allowance should be given to young people (18 to 25 years
old), without job and unemployment benefits, but looking for a job.
The France must be ambitious targets for children poverty rate
reduction.
The need to provide collective services to children and the need to
provide their families with a decent standard of living should not be
opposed.
The additional resources needs for family policy should be borne by all
taxpayers, and not specifically by the families of the middle classes, who
are not favored in the present system.
6161
Unfortunately, due to the decline in the number of children and in the
number of large families, the family regime should not have funding
problems.
Therefore, it is possible to improve the situation of the poorest families
without increasing the weight of spending for families and without affecting
the situation of the others families..
Official projections conducted by the High Council for family or by the High
Council for the funding of Social Protection include an equilibrium of the
Social Security regimes, would be achieved, in large part, by maintaining, ad
aeternam, in indexation of most family benefits on price, not on the average
or median income. This would lead to a continual decline of the importance
of family benefits and of the relative standard of living of families, as to an
increase in the rate of child poverty. Thus, the family branch would be
gradually stripped in favor of health or old age branches. This choice is
hardly promising. It should at least be presented and openly discussed.
It would be counterproductive to French society to forget. due to short-term
concerns. that the expenses for children are a fundamental investment for
the future.
