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France: healthy state of the labour market in 2019

3/10/2020

The key metrics of the French labour market for 2019 are available and they paint a healthy picture, with strong job gains and a significant fall in the unemployment rate.

TRANSCRIPT // France: healthy state of the labour market in 2019 : March 2020

3 QUESTIONS

François Doux:

Three Questions on the French labour market. We have just seen the 2019 figures.

Hélène Baudchon, hello.

Hélène Baudchon:

Hello.

François Doux:

First question. The labour market and unemployment figures for 2019 have been described as positive. Why?

Hélène Baudchon:

First because there was fairly substantial job creation in the private sector (217,000 as an annual average).

2019 was also the sixth consecutive year of growth in employment, a long sequence that is fairly exceptional, with a total of nearly 1 million jobs created since the low point of 2014.

Another remarkable and positive development has been the creation of jobs in industry for the second consecutive year. Admittedly the figure was very modest, but this return to positive territory comes after 16 years in the red. Lastly, on the employment side, there was another positive indicator. We have a number of signals suggesting an improvement in the quality of employment (more permanent contracts, fewer temporary contracts and an increase in the qualification level of jobs held).

François Doux:

So that covers job creation. What about unemployment?

Hélène Baudchon:

The good news comes mainly from the fact that it fell to 8.1% by the end of 2019, its lowest level since mid-2007, that is to say during its last downward phase. The current fall in the unemployment rate, which began in mid-2015, has been gradual but steady. So, in the end, it has added up to something fairly substantial, with the unemployment rate coming down by a total of 2.4 points. Other indicators confirm the improvement in the labour market, including the increase in the employment rate, the fall in part-time working, and the falls in underemployment and in long-term unemployment. There are, however, a couple of negative points in the overall picture: the French unemployment rate remains high in absolute terms and, unusually, it is higher than the eurozone average, by about 1 point according to Eurostat figures.

François Doux:

Why are these unemployment and employment figures being talked of as being remarkable?

Hélène Baudchon:

The first reason is that job creation has proved more resilient than growth. Growth lost half a point between 2018 and 2019 (dropping from 1.7% to 1.2% as an annual average), but private employment growth barely flinched, growing by 1.1% in 2019, after 1.2% in 2018. The second remarkable feature is that the fall in the unemployment rate was bigger in 2019, when it dropped 0.6 of a point, than in 2018 when it fell by 0.4 of a point. These trends all more or less fit together: growth has slowed, but remains sufficiently strong to create jobs.

François Doux:

But it is not just a growth effect?

Hélène Baudchon:

No indeed, it is not just a growth effect. There are other reasons for this good performance in the labour market. First, the slower growth in the active population helps bring down the unemployment rate. Secondly, there is the slowing trend in labour productivity gains (which means that for a given level of growth there is a greater number of jobs) and, thirdly, there have been specific measures to increase the employment content of growth, for example reductions in the cost of employment, support for apprenticeships and professional training and the relaxation of some labour regulations.

François Doux:

Final question, Hélène Baudchon. What can we expect for the coming months? Will we reach President Macron’s target of 7% in 2022?

Hélène Baudchon:

It is possible, if the same causes produce the same effects. That is to say if the three parameters that I just mentioned continue to work positively (which we think looks highly likely) and if growth remains fairly clearly above 1%, which is a big “if”, a strong assumption. So the target unemployment rate of 7% in 2022 cannot be taken for granted, but at least now it looks achievable, which is to be welcomed.

François Doux:

Thank you Hélène Baudchon for this update on the French labour market. For more on this, check out our “Macro Waves” podcast on the labour market in France, available on all streaming platforms. It’s called “Macro Waves”. I’ll be back in a month’s time for the next edition of EcoTV

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