The number of unemployed people leapt by 311,037 in March (seasonally-adjusted figures), the biggest monthly increase on record. However, the unemployment report only included a fraction of people in partial unemployment (data for April should show a much bigger jump). The latest Government accounts (2019) show a substantial narrowing of the primary deficit since 2013. The improvement in public finances gives the government some leeway to face the current crisis.
In March, the employment component of the purchasing managers indices for the eurozone declined, whereas in the US, initial jobless claims skyrocketed. Companies need flexibility to manage their cost base but households suffering from an unemployment-related income loss would act as a headwind to the recovery. In the US, the Federal government will top up unemployment benefits, which vary from state to state. In Europe, short-time work schemes allow employers to adapt their workforce without having recourse to costly lay-offs.
Employment and unemployment figures for Q4 2019 and the year as a whole in France were surprisingly strong, especially since growth weakened markedly, despite showing some resilience. The preliminary Q4 2019 growth estimate fell well short of expectations (GDP contraction of 0.1% q/q), but private payroll employment (up 0.2% q/q, preliminary estimate) and the unemployment rate (-0.4 points to 8.1%) were far better than expected. Growth averaged 1.3% over 2019 as a whole – nearly a half-point lower than in 2018. Conversely, private payroll employment barely lost any traction (up 1.1% after a 1.2% rise), and the drop in the unemployment rate was slightly larger in 2019 than it was in 2018 (-0.6 points to 8.4%, after a 0.4-point decline in 2018)
Population ageing creates major challenges for PAYG retirement systems in the OECD countries. Reforms are needed to their sustainability. These reforms have taken two directions: lower benefits or the extension of the retirement age. Based on current regulations, in most countries, benefits will be less generous for future cohorts. In Poland, replacement rates - the percentage of an individual's latest employment income that is replaced by a pension benefit upon retirement - could be more than halved compared to those retiring now. Another possibility is the lengthening of the normal pension age. Countries that have linked the pension age to life expectancy will be able to maintain benefits at a relatively high level
As the unemployment rate stabilises owing to the economic slowdown (14.1% in November 2019), the active population is finally rebounding. This is mainly due to the stabilisation of the number of young workers under the age of 30, after several years of decline. The chart shows that this decline had been strong since 2009. Such a decrease has been observed in the 30-40 years-old age group as from 2011-2012. For the latter group, the decline continues today. Conversely, the labour force over 40 and over 55 years old has never stopped growing, even during the years of crisis. These trends are mainly the results of changes in the participation of various age groups to the labour market
The latest data on unemployment and job creation have surprised on the upside. They continue to be better than the long-term average. This strong labour market supports household confidence, which remains well above the long-term average, and retail sales, which did slightly better than expected. However, several numbers have come in below expectations and are below historical averages. This points towards a slowing economy, despite the satisfactory GDP data for the third quarter. Noteworthy in this respect are the two ISM indices. In addition, like in numerous other countries, industrial production is under pressure.
Revenue of older people mainly consists of state and occupational pensions and income from savings and work. In countries that have, relatively speaking, more generous pension benefits, labour participation of the elderly is relatively low. In France, only 3% of people older than 65 still work, compared to almost 20% in the US and 25% in Japan. Moreover, the French old age poverty rate, the percentage of seniors (66+) whose income is lower than 50% of the median household income, is among the lowest in the OECD. The chart shows that, in general, there is a positive relationship between the percentage of revenue of older people coming from work and their at-risk-of-poverty rate. It thus seems that, when seniors feel financially constrained, they decide to work longer
Job polarization describes the structural deformation of the job market in which the share of jobs increases at the top and bottom of the skills ladder and decreases for middling jobs. In theory, job polarization is U shaped. Empirical data easily shows a decline in the share of jobs in the middle distribution (the bottom of the U), as well as an increase in the most skilled jobs (right side of the U). This J-shaped semi-polarization is symptomatic of an “upgrading” effect, i.e. the overall rise in the level of education and skills attainment. The left side of the U, in contrast, which represents the increase in the share of low-skilled jobs, is often less developed and sometimes non-existent. In France, job polarization is more or less apparent depending on the study
Since Q3 2018, private payrolls gains have been on an upward trend (+31k in Q3 2018, +54k 2018 in Q4, +66k in Q1 2019), contrasting favorably with the stability of GDP growth over the same period. Nearly 900,000 private payrolls were created on a net basis since the 2013 trough. The prospects for 2019 are encouraging judging by the latest Pole emploi study on manpower requirements, which reports another sharp rise in staffing plans of 15% after an impressive gain of 19% in 2018. These plans represent 2.69 millions of potential hiring. Their number is up in every sector and in a particularly dynamic way in the construction, industry and business services sectors. The large increase in recruitment projects on open-ended contracts (+24%) is also noteworthy (+8% for fixed-term contracts)
May Day is approaching. It is the occasion to celebrate progress made in improving workers’ rights. It can also be an opportunity to recall how much the quality of social dialogue matters for a well-functioning of the labour market. According to 2018 Global Competition Review of the World Economic Forum, the quality of labour-employer relations is relatively high in continental northwest Europe and Japan. At the same time, these countries score very well in terms of labour market outcomes. The lightly regulated labour markets in the English-speaking countries have also achieved low unemployment levels, although jobs are less well protected. In the southern European countries, the social dialogue seems to function less well. Unemployment in these countries has remained persistently high