Organisation and Delivery of Social Protection

Funding of Social Protection

In France, social protection is financed by earnings-related contributions and – to a smaller extent - taxation. In the case of salaried workers, contributions are deducted directly from gross salary and shared by the employee and the employer (with the exception of contributions to the family benefits scheme which are paid in full by the employer). The breakdown in terms of social protection funding sources is 70% in contributions, 17% in taxation and 13% in state contributions.

The taxation share has grown over the past few years, with the introduction of two special taxes: the general social contribution (CSG, contribution sociale généralisée) – which outstrips personal income tax– and the contribution towards the reimbursement of the social debt (CRDS, contribution au remboursement de la dette sociale). Both taxes are levied on all incomes, professional earnings included.

The total amount spent on social protection each year is over €470 billion, 43% of which is devoted to retirement benefits. Recent years have seen the emergence of a debate about funding mechanisms to reduce employer payroll contributions, since they tend to push up labour cost at the expense of job creation.