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The French labour market: 2020 in review

ECO FLASH  
N°21-06  
06 April 2021  
THE FRENCH LABOUR MARKET (PART 1): 2020 IN REVIEW  
Hélène Baudchon  
In 2020, the Covid-19 pandemic had a much smaller  
impact on the French labour market than on GDP. On an  
average annual basis, GDP growth plunged 8.2% while  
private payroll employment declined by only 1.7%. The  
unemployment rate even fell slightly compared to 2019  
CHANGE IN GDP AND PRIVATE PAYROLL EMPLOYMENT  
y/y, %  
5
0
5
(
-0.4 points on an average annual basis).  
0
Employment was buffered by emergency support  
measures, notably the massive use of job retention  
schemes, which is the main reason why the overall  
negative impact was so mild.  
-5  
-5  
Private payroll employment  
GDP  
-10  
-10  
-15  
-20  
Yet the impact was disproportionate by sector: in  
Q4 2020, compared to the year-earlier period, 75% of  
payroll job losses were concentrated in the four sectors  
hit hardest by the crisis (hotel & restaurant services,  
household services, transport services and transport  
equipment manufacturing), even though their employ-  
ment share is 5 times smaller (16%).  
-
-
15  
20  
2006  
2008  
2010  
2012  
2014  
2016  
2018  
2020  
CHART 1  
SOURCE: INSEE, BNP PARIBAS  
1
After a stand-out performance in 2019 , the labour market’s 2020 performance was  
even more remarkable given the circumstances and the massive recessionary shock  
that hit the French economy. As the following figures illustrate, the labour market was  
buffered from the shock, and the overall impact was relatively mild. On a year-on-year  
The counterintuitive fluctuations in the unemployment  
rate can be attributed to the misleading effects of  
methodology. During lockdowns, numerous jobseekers employment declined only 1.6%. The unemployment rate even declined slightly, down  
exit the labour force because they cannot actively seek  
work and/or show that they are available to work. As a  
result, they no longer qualify as jobseekers according to  
ILO criteria. Instead, they are counted as part of the halo  
around unemployment, which has increased sharply.  
basis, GDP contracted 5% in Q4 2020 relative to pre-crisis Q4 2019, but private payroll  
2
0
2
.1 points to 8% of the labour force. On an average annual basis, GDP plunged 8.2% in  
020, but employment fell only 1.7%, and the jobless rate even managed to decline  
0.4 points to 8% compared to 2019.  
Now that the main labour market indicators for 2020 are available, in this article we  
will draw up a preliminary assessment of this very unusual year. In a second article, we  
will present the 2021 outlook.  
Employment: muted trends  
Underemployment, which includes short-time work, has In 2020, an average of 332,000 private payroll jobs were lost during the year. This was  
also risen rapidly.  
a real achievement considering the circumstances. Although the figure is high, it is  
not as bad as the 420,000 job losses reported in 2009, even though GDP contracted  
by an unprecedented 8.2% in 2020 (compared to -2.8% in 2009). Compared to GDP,  
employment trends were remarkably muted, both downwards and upwards, which is  
one of the most striking characteristics of the crisis (see chart 1).  
The impact of the crisis on hiring declarations and the  
number of category A jobseekers is more in line with  
what one would expect.  
1
2
EcoFlash, France: stand-out labour market performance in 2019, n°2, 28 February 2020  
Scope used in this article (except when mentioned otherwise).  
The bank  
for a changing  
world  
Eco Flash 21-06 // 06 Aprill 2021  
economic-research.bnpparibas.com  
2
They can be attributed to the massive use of short-term work schemes,  
made possible by the government’s decision to facilitate retention  
schemes as part of emergency measures to buffer the impact of the  
lockdown (see box at end of this article for a summary of modifications  
to short-term work schemes and other measures to support the labour  
CHANGE IN VALUE ADDED AND PAYROLL EMPLOYMENT BY SECTOR  
GAP WITH PRE-CRISIS LEVELS (Q4 2020 RELATIVE TO Q4 2019, %)  
Total  
Value added loss  
Job loss  
Trade 10  
Agriculture  
Food industries  
3
market ).  
0
Transports  
The muted nature of employment variations relative to growth rates  
is even more striking in the four sectors hit hardest by the crisis  
-
10  
-20  
30  
-40  
50  
Accomodating, catering  
Capital goods  
(
hotel & restaurant services, household services, transport services  
-
and transport equipment manufacturing, see chart 2). Even so, the  
impact was highly disproportionate by sector. In Q2 2020, the French  
economy destroyed nearly 700,000 payroll jobs compared to Q4 2019.  
The hardest hit sectors accounted for 35% of these job destructions, or  
nearly 240,000 jobs, even though their share of payroll employment  
was only about half that size (16%). By Q4 2020, the impact was even  
more disproportionate: whereas the total number of job losses had  
diminished relative to Q4 2019 (to about 280k), job destructions did not  
shrink by as much in the hardest hit sectors (roughly 215k). As a result,  
the hardest hit sectors accounted for three-quarters of total job losses.  
Information-  
communication  
Transport equipment  
-
Financial services  
Other industries  
Real estate services  
Energy, water, waste  
Business services  
Household services  
Construction  
Non-market services  
CHART 2  
SOURCE: INSEE, BNP PARIBAS  
Temporary work, which also played its usual role as an adjustment  
variable, paid a heavy price: of the 332,000 job destructions in 2020  
(
average annual basis), half were in this segment alone (-166k).  
Market services excluding temporary work accounted for nearly  
all of the remainder (-156k). There were fewer job destructions in  
agriculture (-5k) and industry (-36k). In contrast, construction and  
non-market services stand out for their net job creations (+28k and  
SECTOR BREAKDOWN OF QUARTERLY EMPLOYMENT BUMPS  
Quarterly change in private payroll employment (thousands)  
4
00  
00  
200  
00  
+
2k, respectively).  
3
Although these average annual figures provide a preliminary idea of the  
scope of the shock, they must be analysed more closely because they  
mask the very jagged quarterly trends that hit employment (see chart  
1
3
). In particular, unlike GDP, the decline in employment was sharpest  
0
100  
200  
in Q1 and not in Q2. Moreover, all of the drop-off in temporary work  
occurred in Q1, which explains the difference with GDP trends.  
-
-
Industry  
Construction  
Services excl. temporary work  
Temporary work  
Total  
In contrast, according to hiring declarations reported by Acoss, the  
impact of the crisis on hiring does not seem to have been buffered in  
the manner presented above. Hiring reports, all types of job contracts  
combined, plummeted at an average annual rate of nearly 30% in 2020.  
Echoing the collapse of temporary work, 80% of this decline can be  
attributedtohiringreportsforfixed-termcontractsoflessthanamonth,  
while hiring reports for fixed-term contracts of more than a month and  
permanent job contracts did not decline as sharply (accounting for 9%  
and 12%, respectively, of the total decline). Permanent job contracts  
-300  
-
-
400  
500  
2016  
2017  
2018  
2019  
2020  
CHART 3  
SOURCE: INSEE, BNP PARIBAS  
benefited from the buffer effect of short-term work schemes. Without criteria: to be without work, actively seeking work and rapidly available  
providing an explanation, we simply note the relatively stronger to work. During lockdowns, especially the first one last spring, it was  
showing of hiring reports for fixed-term employment contracts of more difficult if not impossible to be actively seeking work and/or to be  
than a month. In Q3 2020, they briefly rose above pre-crisis levels, available to work. This resulted in a sharp decline in the labour force  
while the two other types of hiring remained far below previous levels. in H1 followed by a major upward correction in Q3 and another decline  
in Q4. These trends helped shape the dynamics of the unemployment  
Unemployment: counter-intuitive trends due to misleading  
rate. Yet the Q4 decline (-1.1 points) is less misleading than in Q1  
methodological effects  
and Q2 (-0.3 and -0.7 points, respectively) since it is mainly due to an  
Throughout 2020, the fluctuations in the unemployment rate were as increase in the employment rate.  
remarkable as they were counterintuitive. The jobless rate fell sharply  
in H1 (when economic growth plummeted) before rising strongly in  
Q3 (when GDP rebounded) and then declined again in Q4 (just as GDP  
fell again). The main explanation for these counterintuitive trends is  
the definition of a jobseeker based on International Labour Office (ILO)  
Despite the massive recessionary shock that hit the French economy in  
020, the unemployment rate still managed the difficult feat of ending  
the year at the same level as one year ago (0.1 points lower, to be  
exact) and to average 0.4 points less (8%, vs. 8.4% in 2019, the lowest  
level since 2007). But there were two drawbacks:  
2
3
For a descriptive assessment of the use of short-time working schemes see Unedic, Short-time work: preliminary review since the start of the Covid-19 crisis, Eclairages,  
September 2020.  
The bank  
for a changing  
world  
Eco Flash 21-06 // 06 Aprill 2021  
economic-research.bnpparibas.com  
3
•
•
A sharp rise in the halo around unemployment (which comprises  
people who are out of work and want to work, but do not meet  
the ILO criteria for actively seeking work or being available to  
work soon, and are consequently not included among jobseekers):  
UNEMPLOYMENT RATE AND CATEGORY A JOBSEEKERS  
Number of category A jobseekers (thousands, LHS)  
Unemployment rate (INSEE measure-ILO definition, % of labour force, RHS)  
1
+
0.8 points for the year; 4.6% of people in the 15-to-64 age group,  
which is the highest proportion since the series began in 2003,  
and a little more than a point higher than the 2003-2019 average.  
1.0  
0.5  
4500  
000  
500  
000  
500  
2000  
1
A sharp increase in underemployment (which comprises short-  
time workers who would like to be working more as well as  
those who have been furloughed or are working shorter hours):  
4
10.0  
.5  
9
3
+
3.7 points for the year; 7.3% of people in the 15-to-64 age group,  
9.0  
8.5  
which is also the highest level since the series began in 2003,  
and significantly higher than the 2003-2019 average of 3.9%.  
Furloughed or short-time workers, who usually make up a very  
minor share of employment (0.4%), accounted for 15% when these  
schemes peaked in Q2 2020.  
3
8
.0  
.5  
7.0  
2
7
9
7 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21  
The impact of the crisis on the number of category A jobseekers was  
more in keeping with what one might expect, moving in line with the  
different lockdown and reopening phases (see chart 4). There was an  
historic increase in March and April 2020 (a cumulative rise of 33%),  
followed by a sharp decline from May to October (-18%), a rebound  
in November (+1% m/m, a normal increase usually seen in crisis  
situations), stability in December, and an easing trend in January 2021  
CHART 4  
SOURCE: INSEE, PÔLE EMPLOI, BNP PARIBAS  
TWO NEW GAUGES TO ASSESS THE HEALTH OF  
THE FRENCH LABOUR MARKET  
(
-0.9% m/m). For Q4 2020 as a whole, the declines won out (-3% q/q):  
although smaller than in Q3 (-11% q/q), this quarterly decline  
nonetheless caught our attention given the simultaneous decline in  
GDP. On an average annual basis, the number of category A jobseekers  
increased by 8.8% in 2020. This is also a remarkable performance  
since it is much smaller than the one reported in 2009 (+22%), even  
though the contraction in GDP (-2.8%) was not as severe as in 2020.  
To conclude, it is worth noting that in January 2021 (latest data point  
available), the number of category A jobseekers was still 8% above the  
pre-crisis level of Q4 2019.  
0
.6  
0.6  
The two spreads read in the same direction:  
a positive (negative) difference is a good (bad) sign  
0
.4  
0.2  
.0  
0.2  
-0.4  
0.4  
0.2  
0
0.0  
-
-0.2  
-0.4  
-0.6  
-0.8  
-1.0  
-1.2  
-
-
-
-
0.6  
0.8  
1.0  
1.2  
Difference between hiring reports for jobs lasting more  
than 1 month (sum over 4 months, millions) and the gauge  
of 2.7 millions  
Difference between the -130k gauge and the 6-month  
*
**  
change in the number of category A job seekers (millions)  
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21  
In a forthcoming article, we will review the labour market prospects in  
021. In summary, employment and the jobless rate are both expected  
CHART 5  
SOURCE: ACOSS, PÔLE EMPLOI, BNP PARIBAS  
2
to rise, but there is great uncertainty over the size of these movements,  
which could be small for employment, but large for the unemployment  
rate. Uncertainty over the size of the rebound in employment is linked  
in part to the vigour of the recovery. The France Relance recovery plan  
will surely fuel growth in employment. But employment will continue to  
be curtailed by the lagging impact of the massive recessionary shock in  
2
020, the negative impact of higher corporate bankruptcies, persistent  
sector disparities, the return to work of furloughed or short-time wor-  
kers, and corporate efforts to restore productivity and margins. As to  
the unemployment rate, there is uncertainty over the dynamics of both  
employment and the labour force.  
Hélène Baudchon  
helene.baudchon@bnpparibas.com  
The bank  
for a changing  
world  
Eco Flash 21-06 // 06 Aprill 2021  
economic-research.bnpparibas.com  
4
JOB PRESERVATION AND SUPPORT MEASURES  
Employee compensation (% of gross wage)  
Employer allocation (% of benefit paid to employee)  
Flat rate  
Duration  
6 months renewable  
12 months renewable  
Short-time working pre-crisis  
Prior to 1 June 2020  
70%; minimum at net SMIC  
70%; minimum at net SMIC  
100%; up to 4.5xSMIC; minimum at €8.03  
Companies legally required to close  
From 1 June  
020  
or with 80% loss of revenue and  
70%; minimum at net SMIC  
70%; minimum at net SMIC  
100%; up to 4.5xSMIC; minimum at €8.03  
1
2 months renewable  
2 months renewable  
2
protected sectors  
Unprotected sectors  
85%; up to 4.5xSMIC; minimum at €8.03  
Companies legally required to close  
or with 80% loss of revenue  
1
00%; up to 70% of 4.5xSMIC; minimum at €8.11  
From 1 April  
021  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
1
2
Protected sectors  
85%; up to 60% of 4.5xSMIC; minimum at €8.11  
60%; up to 36% of 4.5xSMIC; minimum at €7.30  
100%; up to 70% of 4.5xSMIC; minimum at €8.11  
Unprotected sectors  
60%; up to 60% of 4.5xSMIC; minimum at net SMIC  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
Companies legally required to close  
or with 80% loss of revenue  
From 1 May  
021  
12 months renewable  
2
Protected and unprotected sectors  
From 1 July 2021  
60%; up to 60% of 4.5xSMIC; minimum at net SMIC  
60%; up to 60% of 4.5xSMIC; minimum at net SMIC  
60%; up to 36% of 4.5xSMIC; minimum at €7.30  
60%; up to 36% of 4.5xSMIC; minimum at €7.30  
3
months renewable  
(
6 months max over 12 months)  
From 1 July  
020  
Protected sectors and related  
Other sectors  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
100%; up to 70% of 4.5xSMIC; minimum at €8.11  
85%; up to 60% of 4.5xSMIC; minimum at €8.11  
6 months renewable  
(2 years max over 36 months)  
2
Companies legally required to close  
or with 80% loss of revenue  
1
00%; up to 70% of 4.5xSMIC; minimum at €8.11  
From 1 April  
021  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
6 months renewable  
(2 years max over 36 months)  
2
Protected sectors  
Unprotected sectors  
85%; up to 60% of 4.5xSMIC; minimum at €8.11  
85%; up to 60% of 4.5xSMIC; minimum at €7.30  
Companies legally required to close  
or with 80% loss of revenue  
Protected and unprotected sectors  
From 1 May  
021  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
70%; up to 70% of 4.5xSMIC; minimum at net SMIC  
100%; up to 70% of 4.5xSMIC; minimum at €8.11  
85%; up to 60% of 4.5xSMIC; minimum at €7.30  
85%; up to 60% of 4.5xSMIC; minimum at €7.30  
6 months renewable  
2
(2 years max over 36 months)  
6
months renewable  
From 1 July 2021  
(
2 years max over 36 months)  
Numerous measures were adopted to limit the impact of the Covid-19 crisis on the economy in general and the labour market in particular. One of  
the most important measures was to bolster short-time work schemes. The table presents the various changes that were made and illustrates the  
increase in government support and the extension of the terms of compensation. To address the more durable decline in activity in certain sectors, a  
long-term short-time working status was also introduced, which was conditioned on reaching a collective bargaining agreement.  
In addition to these job retention measures aiming to safeguard jobs and preserve human capital, direct support measures were also introduced to  
help young people join the workforce (1-youth, 1-solution job insertion plan). Starting on 1 August 2020, a company that hires someone under the age  
of 26 with a job contract of more than 3 months benefits from a EUR4000 reduction in charges. Initially expiring on 31 March 2021, this measure was  
extended by two months (up to 1.6x the minimum wage, and no longer 2x). Major bonuses were provided to support apprenticeship and vocational  
training contracts (EUR5000 for youth under age 18, EUR8000 for older work/study participants). These bonuses started in July 2020 and will run  
through 31 December 2021. New training programmes were created to orient and train 200,000 young people to help them enter the sectors and  
professions of the future. Young people with the lowest employability will benefit from 300,000 customised job insertion paths.  
Supporting employment lies at the heart of the France Relance plan: in addition to the direct measures of the “1-youth, 1-solution” plan (social  
cohesion segment), measures to boost corporate competitiveness and facilitate the energy transition, and more generally, the plan’s efforts to fuel  
growth, should be key drivers of employment.  
Precarious workers are supported through exceptional monthly financial aid of EUR900. Available from November 2020 to May 2021, this aid is means  
tested (gross monthly income of less than EUR 900) and conditioned on labour market participation (recipients must have worked at least 138 days  
in 2019, including more than 70% as part of short-term contracts).  
As to unemployment insurance, the benefits of jobseekers reaching the end of their rights were extended during the lockdown periods, through  
3
0 June 2021. The application date was modified for the 2019 reform calling for tighter eligibility requirements for unemployment benefits. Initially  
the contribution period was to be extended from 4 to 6 months over a 24-month period, but the conditions were eased by introducing a benchmark  
interval extended by the duration of the lockdown. For jobseekers under age 57 with gross monthly income of more than EUR 4500, the 30% digression  
of benefits after 6 months was revised to 8 months as of 1 April 2021. Both of these measures will be tightened according to the initial terms of the  
2
019 reform once two conditions will have been met: 1) the number of category A jobseekers declines by 130,000 over 6 months, and 2) hiring reports  
of more than 1 month (excluding temporary work) has exceeded 2.7 million contracts over a moving average 4-month period. As to chart 5, it will not  
be easy to meet the conditions for returning to a healthy job market. The new calculation of jobless benefits (which calls for benefits to be the same  
for the same number of hours worked) will apply as of 1 July, although a more watered-down version will be used to avoid an overly sharp reduction  
in benefits for the most precarious workers. A bonus-malus system for employer unemployment contributions was introduced to combat the abusive  
use of short-term contracts, but its start-up has been postponed until 2022.  
*
Based on information available as of 25 March 2021. Sources: daily press, the French government. BNP Paribas Box written by Julie Bouvry (intern).  
The bank  
for a changing  
world  
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