Emmanuel Macron’s pledge to return France to full employment is increasingly difficult to keep. Trapped in stagnant growth, France is scrambling to recreate jobs. After several years of consecutive declines, the unemployment rate should rise to 7.5% of the active population at the end of the year, up from 7.4% in the third quarter, INSEE forecasts. That’s certainly a minimal increase between the two quarters, but it’s still 0.4 points (7.1%) year-to-date.
Thus, employment growth was faster than GDP growth for almost two years. As a result, productivity in France and Europe, i.e. the wealth created by employment, has fallen considerably. But it seems that this period is over. As of now, the pace of job creation has again fallen in line with the pace of activity. Therefore, in this context of slow growth, the government is trying to find a solution by proposing ways to liberalize the labor market that would revive the employment machine. However, these flexibility options could prove insufficient to counter rising unemployment in a particularly bleak economic climate.
Unemployment to 7.6% by mid-2024
In fact, the outlook for the first half of 2024 is hardly encouraging. As a result of the economic slowdown, INSEE expects an unemployment rate of 7.6% at the end of June next year, according to the International Labor Office (ILO). The French economy should continue to create jobs, but at a much slower pace than during the post-Covid recovery. For example, in 2022, more than 100,000 jobs were created on average per quarter. And during 2023, that pace suddenly slowed to 26,000 creations in the fourth quarter. As for the first two quarters of 2024, only 23,000 jobs are expected to be created.
How to explain such a slowdown? The end of the Covid aid, but also the tightening of the ECB’s monetary policy from July 2022, leading to a general slowdown in the economy, have greatly darkened the prospects of companies for hiring employees. HAS And this is in addition to the gradual closure of teaching aids. At the time of the revival of the French economy, the government of Jean Castex opened wide the subsidies for hiring apprentices in private sector enterprises. But in the meantime, the government has decided to tighten the screws on these levers.
The pension reform strengthens the working population
This increase in unemployment is also one of the expected effects of the criticized pension reform. The validity of the increase in the retirement age from 62 to 64 years from September 1 caused a jump in the working population. “In the fourth quarter of 2023 and the first half of 2024, mainly due to the pension reform, the active population will continue to increase,” emphasizes INSEE in its economic report.
Many seniors who planned to liquidate their pension rights in the coming months now find themselves in the Pôle’s employment and unemployment statistics. HAS These will soon be added to the RSA beneficiaries who will be counted in the records of the future operator France Travail from next January. In a context of slow growth, these registrations could dash the government’s dreams of full employment.