The employers’ organization details a plan to reform the financing of social protection, banking on a massive reduction in charges and a transfer to VAT and wealthy retirees.
Medef presented a major reform project for the financing of social protection, aiming to significantly reduce the burdens weighing on businesses and employees. As the presidential election approaches, the employers’ organization is proposing an overall reduction in social security contributions of 30 billion euros in net, distributed between companies and private sector employees.
A net relief of 20 billion for businesses
In detail, companies would see their costs decrease by 20 billion euros in net. Medef boasts a reduction in contributions of 60 billion, but this would go hand in hand with a “mechanical” disappearance of reductions in charges for salaries between 2 and 3 times the minimum wage (30 billion euros). Furthermore, employers would see their old age contributions increase by 10 billion. Taking into account the additional tax on profits that they would have to pay, companies would ultimately pocket 16 billion euros. “That’s 50,000 euros more per year for a company with 50 employees to produce, invest and recruit!”, boasts the organization.
According to projections made by Rexecode economists, this “competitiveness shock” would result over the next decade in the creation of 260,000 jobs, a recovery in the trade balance of 0.3 points of GDP (or “70 Rafale planes per year”) and a boost to French growth of 0.7 points of GDP.
Medef also wants to give a boost to private sector employees, thanks to a reduction in their old-age contributions of 10 billion euros, fully covered by employers. An employee on minimum wage would pocket 300 euros per year, the gain reaching 650 euros for a gross salary of 4,000 euros. With part of these gains evaporating in income tax, the reform would broadly benefit one third to employees and two thirds to businesses.
Financing based on VAT and wealthy retirees
To finance this reduction in costs, it is first of all well-off retirees who would be called upon to contribute. Their CSG rate would be aligned with that of assets and the 10% income tax reduction on pensions would be removed, allowing the State and Social Security to recover 6 billion euros.
The 19 billion remaining to be financed would come from an increase in VAT. The normal rate of 20% would increase by around 2.3 points. Medef, however, wants to be reassuring: this increase would not penalize low-income households, to the extent that a large part of their expenses (catering, food, energy, transport) fall under reduced rates which would not change.
Beyond its political and social acceptability, the main pitfall of the reform is that it does not contribute to the necessary recovery of accounts, believes public finance specialist François Ecalle. For the founder of the Fipeco site, the priority is to stabilize the public debt by making a budgetary effort of around a hundred billion euros. “Increasing VAT has a high political cost,” he emphasizes. “If you spend this political capital to compensate for cuts in social security contributions, you will no longer have any to reduce the deficit.”
Medef is content to assert that its project does not damage public finances, without improving them. In the summer of 2025, the organization had, however, unveiled ways to reform the health system and save money, in particular by targeting sick leave, a subject that the government has rightly put back on the agenda.
A debate still to be opened
The movement led by Patrick Martin regularly advocates for a reform of the financing of social protection (retirement, unemployment, health insurance), arguing that the system accumulates deficits and weighs too heavily on businesses and employees. Despite its repeated calls to open proper discussions with the public authorities and social partners, these have not started: the executive only recently appointed a panel of experts to work on the issue.
