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AB 2000 studies

Alain Boublil Blog


France and the unemployment

The publication of the last figures has given the opportunity for making reassuring comments. Unemployment rate as the jobseekers number at the end of October came back to the level observed at the eve of the economic crisis provoked by the Cocid-19 pandemic. These results constitute without any doubt good news because the worst was expected and forecast carrying hundreds of thousands of bankruptcies and job losses had been put forward. Adopted and put into practice policies to cope with the economic crisis have been efficient. The providing of State-guaranteed financing has allowed enterprises which had been weakened to surviving. Measures in favor of part-time working have protected the keeping of indispensable relations between employers and employees and the conservation of know-how.

But the fact that in France has been recovered unemployment and jobs level near the ones which were prevailing at the beginning of the 2020 year must only generate a quite limited satisfaction because that level was very high and it shows that policies followed during forty years and especially since the 2007-2008 financial crisis have not delivered the expected results. There were then 2.5 million jobseekers without any job at all in France including Overseas Territories. They were 3.5 million at the end of 2019, i.e. one more million. Regarding the unemployment rate, it was at 7% before the financial crisis. It is over passing 8% today. Only Southern Europe countries are doing worse. Germany, the United States and Japan have unemployment rates twice lower.

Three factors influence the job market. The first one and by large the most important is demography. The very low Germany and Japan birthrates constitute the main reason of their low unemployment rate. France has taken advantage, during the period wrongly qualified as the Glorious Thirties, of a similar situation. The low birthrate between the two wars combined with the huge human losses provoked by these conflicts had reduced the available population at a moment when, due to the reconstruction, the jobs demand was strongly increasing.

The second factor is by nature, societal. A major transformation occurred with the generation born after World War II, the baby-boomers and the birthrate rebound. Since, during the past, women as a majority were aspiring to devote themselves to their family activity, the new generation has chosen to reconcile these duties with the exercise of a professional activity. The job demand then exploded since the beginning of the Seventies. That job market transformation occurred at a time when the world economy was hurt by the two oil shocks and was going through a slowdown. So it is not surprising that the French economy has been confronted with a high and lasting unemployment increase.      

So, the third factor was an economic one. It is thought then that it is growth which will allow to recovering the full employment, even if it will be necessary to take into consideration the evolution of the labor productivity which will operate in the opposite direction. But the followed policies since that period were never able to reach that objective. France has certainly known short growth periods, as at the end of the Nineties or before the 2007-2008 financial crisis, when unemployment has significantly receded but it has rebounded as the figures which has just been published show it. There are still more than 3.5 million persons without any activity who are looking for a job. And if we add these who have only a precarious job or a low part-time one and who want to get again a full-time one, the figure over passes 5 million.

Three kinds of policies have been then put in place. There were first the policies with a Keynesian inspiration during the Eighties with the consumption revival, which against what has been pretended has not increased imports and foreign jobs, along with investments and major public works. That policy has slowed the unemployment growth but has not lasted enough in order to France reach near full employment.

A symmetric policy has been adopted from 2012. Instead of supporting demand, the State has chosen to reduce labor costs, considered as responsible of the competitiveness loss and the de-localizations. The very high charge on public finances has been partly transferred to household taxes, which has generated a growth and job creations stoppage. That policy which has been increased these last years has been, due to very high unemployment level, a double failure. It has lead to an augmentation of the public indebtedness, without any result regarding employment. It has not more profited to industrial activity and to foreign accounts.

The third way is the work sharing. In face of an employment supply which grows slowly due to productivity gains generated by innovation (automation in industry, digitalization in services) and a growing jobs demand, the only efficient way would be to find kinds of working time reductions forms which correspond to employees needs and which would be compatible with the good functioning of enterprises and of public services. The adoption, in 1998, of the 35 hours weekly working-time duration, so much criticized today, has allowed a very significant reduction of the number of job seekers which was also partly caused by the temporary comeback of the world economy to a strong growth. But its application to public services has provoked disorganizations, whose costs are still today paid in the healthcare sector and recruitments in many State and local administrations which were not justified.

To the opposite the encouragement of part-time work for these who choose it would allow to creating many jobs. In Europe, it is the countries which have the most recourse to it like Germany which have the lowest unemployment rate. In France, to the opposite, we have chosen to give taxes and social charges reductions to these who are making overtime hours, which is going against job creations. It would have been better to encourage part-time working with significant incentives.

The successive government failures regarding employment, which are accompanied by a record twin deficit, is the result of two persisting French defaults. The first one consists in trying to reach two objectives in the same time, without questioning if they are not contradictory. The example of the support in favor of overtime working hours is revealing. The government wants in the same time to support purchasing power of some ones and global employment. The second one consists in adopting measures which will be offered to everyone with the fear that these who will not get them will be unsatisfied. So the social charges reductions decided to reinforce competitiveness have more profited to the Post Office and to big retailers than to the car industry. There are no aggressive and efficient policies which are not targeted.

Let’s hope that the political debates which will start with the coming presidential election give the opportunity to the candidates to express their position on the unemployment issue and that credible propositions will be at last offered to French people.