This is the third part of an FT series analysing how the Covid-19 pandemic has transformed the labour market and changed the way millions of people think about work
Aubérie Zaro left her Paris-based Big Four consultancy job in January determined to take some time off to ponder what she really “wanted to do”. After a nine-month pause from the job market, the 30-year-old started looking for a new position. Much to her surprise, she found one that matched her goals within a month.
“I thought with the pandemic all hiring might be frozen, but it was really fast,” she said.
Zaro’s swift and successful job search is one that thousands of French workers have experienced in recent months. As in most developed countries, they have benefited from generous government support for businesses and a sharp economic recovery, which have helped bring the unemployment rate — those out of work but actively searching for jobs — back to pre-pandemic levels of 8 per cent.
But unlike the UK and US, where record numbers of people have left the labour force, France and some other EU countries have also avoided the trend known as the “Big Quit”: the proportion of French working-age people employed or seeking work has risen to 74 per cent, a record high.
Such trends have raised hopes that the post-pandemic economic boom could mark a step-change for countries such as France that have long suffered high levels of structural unemployment.
“Perhaps the conditions have finally been met to reduce the unemployment rate,” said Stefano Scarpetta, director of employment, labour and social affairs at the OECD. “The pick-up in the French economy has been stronger than I expected.”
Direct state support to companies and their staff during the pandemic partly explains why workers in France and some European countries — such as the Netherlands, Norway and Sweden — are either rejoining the labour force or leaving it in lower numbers than in other developed economies.
As part of France’s €100bn Plan de Relance, or Recovery Plan, thousands of companies received financial aid to help them retain existing staff and, in some cases, hire more people. By contrast, the US supported workers’ income by providing extra benefits directly to them.
This system of aid has enabled Nicolas Sordet, head of Lyon-based chemicals start-up Afyren, to add 45 new staff. The €7m it was promised from the state was a “catalyst” to invest in the development of a new factory in northern France that will produce fertilisers from agricultural waste, he said.
Reforms predating the pandemic by over a decade — and continued by President Emmanuel Macron — also played a role. Measures such as a €10bn reduction in business taxes and lower firing costs have made it more appealing for businesses to hire staff, economists say.
Macron policies that targeted the young also had an impact, including a scheme that gave financial incentives to businesses to hire apprentices. Among 15-24-year-olds, employment is now at its highest level since 2003, when records began — although in absolute terms it remains low, at 33 per cent.
Macron, who early in his premiership pledged to slash France’s unemployment rate to 7 per cent from 9.5 per cent, used a national address this month to justify his Quoi qu’il en coûte, or “Whatever it takes”, pandemic strategy, arguing this made it possible “not only to resist the crisis but to bounce back more strongly”.
But economists are divided on how much credit Macron can take for the labour market’s recovery, and concerns persist about its underlying health.
France’s unemployment — 8.1 per cent in the third quarter — is still much higher than in the UK — 4.3 per cent for the same period — or Germany — 3.4 per cent. French companies also report they have difficulty finding staff — although this is a longstanding structural issue that predates the pandemic.
Philippe Martin, professor of economics and deputy chair of the French Economic Analysis Council, said: “Among people aged 25 to 55, the employment rate in France is very standard and comparable to other countries. Where France is doing very badly is for young people and for old people, and that’s a relatively structural problem, which is here to stay.”
Employment among older workers has improved in recent years. Yet although around two-thirds of 50 to 64-year-olds are in work — up by around 10 percentage points compared with a decade ago — France still has one of the youngest effective retirement ages in the world, at an average age of 60.8.
This partially explains why France’s workforce has not shrunk in the same way as in other countries when their economies reopened.
Many of the people that made up the US and UK’s ‘Great Resignation’ were middle aged or older and simply decided to retire earlier than they had planned. In France, the number of ageing people in the workforce who could take the plunge early was smaller as more had already retired.
Martin remains concerned about a persistent lack of technical skills among the young and that France’s early retirement age deters companies from investing in older workers.
“There’s clearly a need for a wake-up call and a big reform of technical and mathematical skills, because we’re going to pay dearly,” he said.
Another worry is that French employment is rising faster than the economy is growing, which could signal a declining productivity.
“It’s not good news that we’re creating a lot of new jobs but with low levels of productivity. It means the average quality of jobs is going down,” said Patrick Artus, chief economist at Natixis. “The big problem we face is skills and I don’t think that has improved under Macron”.
Source: Economy - ft.com
