Facing the social crisis, the government answers that its economic policy is the right one, that the current reforms are producing their first results and these ones are visible regarding employment and growth. It well prevents itself, to the opposite, to comment foreign exchanges numbers which remain alarming. The trade deficit excluding energy is still near 20 billion euro when the policies followed for ten years had, as an objective, to restore the French industry competitiveness. The working costs reduction and the taxes diminutions in favor of enterprises, financed by large by the budget deficit were supposed to regain market shares on the interior market and to develop exports and employment. Obviously, that didn’t occur.
Regarding growth, results and very few convincing because France is going through a near stagnation for ten years, if we set aside the 2017 year. To rejoice because France would achieve a 1.3% rate, in reduction compared to the 1.7% rate in 2018 is a little excessive. And the international comparisons are not in France favor. Growth in the Anglo-Saxons countries is above 2%. In China, if the economy is slowing, it is still around 6% and India tries to follow with a 5% growth rate. Regarding countries hardly hit by the euro crisis, as Spain or Ireland, they have also a growth rate above 2%. The only comparison which is in favor of our country is with Japan, hit by a demographic disaster and Germany. As our neighbor has been for a long time, the model to follow, the point would make sense. It is not at all. The country is confronted with a major crisis. What has made its strength yesterday, its industrial specialization, is today its weakness. Its economy is not enough diversified and poorly prepared to the current technological transformations, and its banking sector is fragile. So, our authorities self-satisfaction, highly supported by commentators, is excessive. But it’s nothing compared to the enthusiastic speech about employment.
Two figures are frequently quoted: the diminution, some are pretending an historical one, of the unemployment rate and the rise of the jobs creations number. On the contrary, and with a dose of cynicism, the publication which has become confidential of the monthly number of job seekers is not the subject of a lot of comments. Yet, if it exist an indicator well suitable to the analysis of the phenomenon, it is the inventory of people who are not working and who looking for a job. Even if the numbers can have bias or fraud, its evolution during a long period is reliable and more representative of the situation of the job market than the other concepts. It is maybe also for that reason that the government has taken the decision to ignore them and, at least, to not comment them.
The unemployment rate is a relative data. If, due to demographic reasons, the number of person whose age allows them to work is growing faster than the number of job seekers, the unemployment rate is falling without the level of unemployment has fallen. It is exactly what is happening today. In metropolitan France the number of A category job seekers at the end of last year was the same than in 2013. Yet, the unemployment rate that year was 10% when it fell back to 8.5% during 2019 3rd quarter. Between 2010 and 2015, the number of unemployed has grown by 150 000 each year as an average. The situation stabilized in 2016. Since that, it is falling, as an average by 50 000 each year. But this number must be compared to the real number of unemployed people which was still around 3.3 million at the end of 2019. To come back to the level it was before the crisis, i.e. 2.6 million, with the rhythm observed for the last three years, it will take near 15 years. And if we take into account the overseas unemployment, which is about 200 000, a much longer period will be necessary. Atop of that, France has an employment rate, an indicator which compares the number of persons who have an activity to the total population with a working age, by large inferior to the other developed countries: 65% against 68% as an average in OECD countries and until 70% in the U.S. and 75.6% in Germany. A large share of the French population, due to the very high unemployment level, has renounced to look for a job and is not anymore appearing in the statistics.
The other motive of satisfaction, which is quite also excessive, is about the evolution of the number of created employee jobs. During the last four quarters, it reached 260 000. Between 2010 and 2016, it had stagnated, as the whole economy. So the change is significant but it goes along with a worrying trend for growth and social stability: the rebound of job creations during the previous two years is including a real explosion of working contracts whose duration is inferior to one month. They rose from 1.7 million as an average at the beginning of the Twenties to 4.4 million during 2019 1st quarter. France is creating more jobs but these ones have a shorter and shorter duration.
The virtuous circle which would guarantee that the employment rebound creates confidence and that one generates consumption and investment by households and enterprises and so a stronger and durable growth with new job creations didn’t start. The reasons are clearly appearing in the numbers which have been published but the government ignores them or pretends to ignore them. The unemployment diminution is still very limited and results from the creation of precarious jobs which are not, by nature, able to generate a return of household confidence in the future. It is the reason why we see among these who have this possibility, an increase of their saving rate. The threats, real or not, on the pension system which result from the government current project, are even increasing this worry feeling and making illusive any prospect of a significant growth rebound in France and consequently of employment.
Regarding economic policy, decisions can have two sources of inspiration. They can come from ideological considerations or from theoretical certainties. A government may think it has been elected to satisfy a social class, for instance the top management of enterprises and their shareholders. On this ground, the success is indisputable: Paris stock market has known a spectacular rise in 2019, even if a part of it is the catching up of the deep fall occurred at the end of the previous year and a record regarding dividends and shares buybacks.
But decisions can also result of economic certainties based on the conviction that the reduction of labor costs and the increase of corporate margins will profit to everybody and especially to employment and wages. It is obviously not the case today and the trends do not allow to forecasting that this will occur tomorrow. In front of the disappointing economic results of the today followed policy in France, which are not unfamiliar to the deep social crisis the country is going through, the risk is real that the arguments given to justify these “reforms” appear like a dressing to hide purely ideological motivations. The political consequences would then be serious and will find their results in the coming polls.