In spite of the conflict in Ukraine and the high rate of inflation, the situation in the job market was robust when the new government took office. The goal of reaching full employment continues to be a priority, but achieving this goal is contingent on ongoing structural change.
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| [Unemployment in France] |
Even if his nomination is still pending, the future Labor Minister of Elizabeth Borne knows one thing for certain: his entering office will take place during a time when the job market is still in a robust backdrop. The unemployment rate maintained its downward trend during the first quarter, falling by around 0.1 percent despite the fact that the global environment is having a dampening effect on economic activity. It now stands at 7.3 percent of the working population, which is equivalent to 2.2 million persons in France. Following the drop that was six times more significant in the prior quarter, we may anticipate a stop in the decrease.
The road plan laid forth by the incoming minister is still quite ambitious:
Full employment: objective maintained
Despite the fact that the conflict in Ukraine and inflation both contribute to an increased level of uncertainty, Emmanuel Macron has maintained his commitment to achieving the goal he outlined during his campaign for the presidency: putting an end to widespread unemployment. This indicates that the unemployment rate will drop by around two points before reaching 5 percent in five years.
These two points will likely be more difficult to get than the two points that have been collected since 2017. This suggests that there has been an increase in the percentage of young individuals and elderly persons who are employed. In the event that hiring continues to be robust, the government may also be in a position to finalise its reform of unemployment insurance by reducing the amount of time that recipients receive benefits. This is in the belief, in spite of opposition from labour unions, that doing so encourages individuals to seek employment again.
A new organisation of all the players who deal with the jobless or the RSA has been referred to as "France travail," which is the name of the major initiative from a structural point of view. It is anticipated that this would result in improved service delivery, although the specifics have not yet been disclosed.
Young people: do not break the dynamic
The unemployment rate for those aged 15 to 24 has dropped significantly since the COVID, dropping from 21.5 percent on average during the last three months of 2019 to 16.3 percent from here on out. This is despite the fact that the rate increased by 0.3 points during the first quarter. It was much higher at the beginning of Macron's first five-year mandate (23.8 percent), which is equivalent to 7.5 points gained by a France that was among the worst pupils in Europe.
This improvement may be attributed in large part to the surge in apprenticeships that has occurred as a result of the Pénicaud reform that was implemented in 2018, the significant hiring incentives that were implemented as part of the recovery plan, and the highly favourable economic situation. Both the employment rate of young people, which is at a record high (34.6 percent), and their activity rate, which is also at a record high, are indicators of this phenomenon.
Because of this, the administration of Borne will need to expertly manage the withdrawal from the "whatever the cost" of the alternation in order to keep the dynamic from being disrupted. Following a successful launch in terms of quantity, he will be tasked with proving that the Youth Engagement Contract is not only a guarantee of quality but also assures a high integration rate for those in the most perilous positions. For their part, vocational high schools are slated to undergo significant change in the near future.
Seniors: big effort to make
This age bracket, which is suffering from biases on the part of employers, is seeing a gradual improvement in terms of the unemployment rate, but the pace of change is slowing down overall. Their employment rate for those aged 55 to 64 years old is still below average, and their unemployment rate has "only" decreased by 1.2 points throughout the first five years of Macron's stay in office (5.6 percent).
As part of the extremely radical pension reform that is yet to come, the administration wants to rethink the arrangements that are made at the conclusion of a person's career in order to make the situation better. Since 2017, under the major skills plan, an unprecedented financial effort of more than 7 billion has been made specifically for the training of the long-term jobless; nevertheless, the impact of this endeavour has yet to be evaluated.
In an effort to address the challenges posed by workforce shortages, Jean Castex allocated $1.4 billion to training programmes in September of last year. Again, the evaluation has not yet been completed in this regard. Because of the significant shifts taking place in the manufacturing sector, the spending plans that are related with retraining will most likely need an evaluation.