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Over the past few decades, France has actively been supporting jobs in services to individuals, to the point that the sector currently involves 1.2 million employees. However, this apparent success belies a strategy that creates few jobs relative to its public cost. It could also contributes to social polarization, with the “new poor” serving the “new rich”. Nathalie Morel, co-author of the book Le retour des domestiques [Domestics are back] (ed. Seuil) and researcher at the Center for European Studies and Comparative Politics and the Laboratory for Interdisciplinary Evaluation of Public Policies, explores the reasons for this growing inequality, and considers fairer policies.

You have just published, with Clément Carbonnier, “Domestics are back”. What is the book’s topic?

The past three decades have seen growing inequality in Western countries. In the labor market the polarization of social situations has translated into a disappearance of middle-skill jobs, which have been overtaken by high-skill and low-skill jobs. This is of a piece with the recrudescence of “domestic” employment, which had fallen sharply in Europe over the 20th century. Granted, these “domestic jobs” – a term we use to describe jobs serving individuals in their homes – differ from the past in their form. Servants living in the homes of their masters have been replaced by employees working in different homes to clean, iron, watch children, and assist the elderly. But the subordinate dimension of these “in the service of” jobs remains via their under-valorization and the interpersonal – and highly asymmetrical – relationship involved. The return of domestic employment has notably been facilitated by public policies implemented in various European countries, and especially in France.

You believe the return of “domestic employment” is partly attributable to public policies?

Femmes de ménage. Pixabay LicenseAt the beginning of the 1990s France implemented a public policy to promote what we now call “services to individuals”. Today, 1.23 million employees (excluding nannies) are involved in these activities, or around 5.5% of total salaried employment. These jobs – especially those of home employees and life assistants who account for most of the employees in this sector – are among the most degraded in the labor market in terms of job quality: low pay, part-time gigs, demanding work, and limited social protection.
France’s public policy consists of tax incentives. These allow households purchasing these services to benefit from a 50% tax credit, up to a ceiling of 12,000 euros per year (15,000 euros for households with a young child or elderly dependent). These incentives have two claimed goals: to develop low-skill labor in services – the growth of which is supposed to compensate for the decline in industrial employment – and to respond to new social needs, like dependent care and childcare. The objective of our book was to assess the impact of these policies with regard to both their purported goals and the new inequalities that they undergird.

Do these tax incentives supporting domestic employment work?

We show that France’s policy fails in two ways: the number of new jobs attributable to the tax credit is low, while the public cost of these jobs on a fulltime basis is much higher than the cost of directly funding these new jobs. Furthermore, given the weak structuration of a sector dominated by at-will employment, and part-time hours with low salaries, these jobs create a precariousness trap. The policy is also highly anti-redistributive: mainly wealthier households are buying services and benefiting from the tax arrangement. French demonstration in Paris - Women rights Manif 8 mars 2017 Paris. Crédits : Jeanne Menjoulet, Flickr. CC BY 2.0 This exacerbates the unequal access to services meeting social needs.

You believe this policy helps create rather than reduce inequalities?

This economic strategy bases increased employment on social inequalities and on the development of “subsidized female poverty”. Regarding the labor market, these policies are conducive to weaker regulation and greater polarization: we are witnessing the development, under the State’s aegis, of a vast sector of degraded jobs with reduced social protection. This does not result from an implacable technological reality and intrinsic weakness in the productivity of these services. It a social polarization choice that doubly benefits the most skilled: through an increase in pay inequalities and through prices reduced by low salaries, weak social protections, and tax subsidies.

And these inequalities do not just concern the workforce…

Yes, they also concern social need coverage: France has chosen to privatize “care” with increasingly sharp inequality effects. Indeed, with population aging, some of these services are devoted to the assistance of elderly dependents. But the care is mainly developing in the private sector (associative or for-profit), with major territorial and economic inequalities. This does not result from public policies’ inability to counter the market’s expansion into the health sector, but rather from their objective of developing a private sector response to these needs, at least for the wealthiest segment of the population. Inequalities in care for young children and the development of private rather than collective types of care also attest to this objective.

Finally, the inequalities also affect lifestyles, since this policy contributes to household polarization, with the wealthy able to purchase more free time at a low cost by delegating domestic tasks to vulnerable women. Thus, while for the most part “domestics” living with their master have given way to “individual services” with employees who work in the homes of several clients, Paper sheet with text TAX DEDUCTIONS and individual tax return form on table. Crédits : Shutterstockthe policy supporting services to individuals marks a return of domestics.

France is not the only country trying to find solutions for childcare and assistance to the elderly… Are other countries doing better or differently in this area?

Other countries in Europe also support domestic services, but France provides the most support. Belgium has developed a system of subsidized “service-titles” to help purchase domestic services, but it involves the mandatory use of an accredited body (direct employment is not possible) and it only covers household services; care services (dependents and childcare) are not covered by this mechanism. Sweden introduced a mechanism very similar to that of France in 2007: a tax credit equal to 50% of the total spent up to a ceiling of 5,000 euros by person (or 10,000 euros by couple). Here again, to benefit from this tax credit, households must go through a company. The mechanism has proven to be just as anti-redistributive as in France, and the ceiling has since been halved. The different mechanisms used across Europe generally yield the same results: jobs degraded to the benefit of the wealthiest households.

What are possible solutions?

Socio-fiscal spending on services to individuals is a major item in the public budget (6.6 billion euros) and is not efficient, as our book shows. Yet this policy is barely challenged. The main justification remains that no alternative solution exists to find jobs for the least skilled workers. However, we argue that alternatives that do not eliminate jobs exist. Given the diagnosis we established, we highlighted the opportunity to:

1. Separate the policy of responding to social needs (childcare and assistance to vulnerable groups) on the one hand, from employment policy targeting other services (so-called “comfort” ones like cleaning and ironing) on the other;

2. For comfort services, substantially lower the annual ceiling for eligible expenses;

3. Respond to growing social needs through the direct funding of services (paired with quality control), and even the public provision of services, notably by using the savings produced by lowering the ceiling for eligible expenses. These are not three independent reform proposals, but rather a single and coherent overhaul.

* Nathalie Morel, assistant professor in political science, researcher at Sciences Po’s Center for European Studies and Comparative Politics (CEE) and at the Laboratory for the Interdisciplinary Evaluation of Public Policies (LIEPP).

Clément Carbonnier is co-director of the LIEPP’s “Sociopolitical policies” cluster. He is a lecturer in economics at Cergy-Pontoise University, a researcher at THEMA, and scientific advisor at the CAE. He works on the impact of taxation on the behavior of economic agents.