Unemployment in France has seen a slight increase, with the rate rising to 7.4% and a total of 2.3 million unemployed individuals. Economic challenges, including rising business failures and public finance deficits, threaten job recovery. Economist Éric Heyer warns that previous job gains were unsustainable, leading to a potential unemployment rate of 8% by 2025. Emmanuel Macron’s goal of achieving 5% unemployment appears increasingly out of reach as weak growth and low consumer spending hinder job creation.
Unemployment Rises in France: A Closer Look
Recent data released on November 13 by Insee indicates a slight uptick in the unemployment rate in France. As defined by the International Labour Organization, unemployment now includes individuals actively seeking jobs and available to work, which has risen by 35,000 since the spring. This brings the total number of unemployed to 2.3 million, translating to a rate of 7.4%. While this figure is relatively low, the upward trend raises concerns.
The Impact of Economic Factors on Unemployment
The current economic landscape is not encouraging for a turnaround in employment figures. Prominent companies such as Michelin and Auchan have recently announced social plans, and the number of business failures is on the rise. Additionally, France’s public finances are in a deficit, which could further hinder employment policies.
So, what does the future hold? Will France face a resurgence of unemployment? Economist Éric Heyer, from the French Economic Observatory (OFCE), provides insights to TF1info.
Heyer suggests that the rapid decrease in unemployment in recent years may have been unsustainable, particularly following the health crisis. France experienced moments of job creation despite limited activity, with the private sector increasing output by 5% and hiring by 6.5% since 2019. However, these job gains seemed disconnected from structural factors, leading to a loss of productivity and an inevitable correction.
During the crisis, state intervention preserved many companies that might have otherwise failed. Heyer explains that there were too many jobs created for three main reasons: significant subsidies for apprenticeships, retention of labor despite the need for layoffs, and public aid during the Covid-19 crisis.
While saving these companies seemed beneficial, Heyer points out that the typical annual business failures range from 45,000 to 67,000, but during the crisis, that number dropped to 28,000. This situation has led to a ‘zombification’ of the economy, with approximately 180,000 jobs preserved at the cost of long-term economic health. Now, as companies face repayment of state-guaranteed loans, those unable to do so are beginning to fail.
As a direct result, unemployment is on the rise again, and predictions indicate it could reach 8% by the end of 2025. Future employment trends will largely depend on economic growth; without substantial progress, job losses are likely to continue.
Emmanuel Macron’s ambition to achieve full employment, targeting around 5% unemployment, appears increasingly unattainable. The international climate, especially with the potential implications of Donald Trump’s election in the U.S., is poised to negatively impact growth in the eurozone. Coupled with a tight national budget strategy, domestic and external demand remain low, limiting prospects for significant economic activity in France.
For any positive change to occur, consumer spending would need to increase, potentially using the savings amassed since the crisis. However, this scenario seems unlikely in the short term, suggesting that weak growth, estimated at around 1%, will persist, further hampering job creation.