A “mystery”, an “enigma”… The situation of the labor market never ceases to amaze economists. Despite a slowdown in growth, which should be below 1% in 2023, the French economy continues to create jobs, thus contributing to the decline in unemployment that began several years ago.
In the first quarter, private salaried employment exceeded its level of a year earlier by 1.3% (+271,100 jobs) and the level prior to the health crisis by 5.8%. At the same time, the unemployment rate reached its lowest level in 40 years, at 7.1%, or 2.2 million people, INSEE announced on Wednesday.
It should be noted at the outset that a possible increase in the radiation of jobseekers cannot explain this fall in the unemployment rate since it is the unemployment rate in the sense of the International Labor Office, measured from a survey of 110,000 people. Unrelated to the figures in Pôle emploi.
Higher employment rate
Almost all the indicators provided by INSEE are green. Starting with the youth unemployment rate, which fell again, to 16.6% in the first quarter (-5.2 points compared to the pre-crisis level). At 68.6%, the employment rate (ratio between the number of employed persons and the total number of persons) from 15 to 64 years of age is the highest since it was measured by the Statistics Institute (1975). Finally, underemployment fell 0.2 points, to 4.4% (1.5 points less compared to the end of 2019) while the employment rate with permanent contracts stands 0.8 points above its previous level to the crisis (50.6%).
“The participation of permanent contracts in employment tends to increase. Not only are we lowering the unemployment rate, but we are also increasing the quality of employment, which is more stable,” Philippe Martin, dean of the School of Business, underlines in BFM Business Public Sciences Po and member of the Circle of Economists.
The only drawback, the halo of unemployment (inactive people who want work but are not looking for it or are not available) increases again, by 0.1 point, reaching 4.6% of the population aged 15 to 64, up to the 2 million people. Head of the synthesis and economic situation of the INSEE labor market division, Yves Jauneau sees it as “a slightly less good sign”, but points out that the halo remains “at a relatively medium level”.
Covid AIDS, learning…
As nice as it is, the improvement in the job market, quarter after quarter, is a challenge. How can this favorable dynamic be explained in a context of slowdown in activity?
There is a mystery in the labor market. Economic forecasters have some trouble explaining this drop in the unemployment rate, which is quite historic,” he adds.
Even if analysts remain cautious, certain causes have been identified. Philippe Martin mentions, for example, “the support for companies that was important” during the Covid crisis and “made it possible to save jobs” that could have been eliminated without state aid. There is also the replacement by local labor of some of the displaced workers whose number has clearly decreased since the pandemic, or even the development of apprenticeships, stimulated by State bonuses, which contributes “around a third” to the fall in the unemployment, estimates Philippe Martin.
productivity drop
The growth of employment, which is faster than growth, reflects a worrying phenomenon: the fall in productivity. According to Dares, productivity per capita is now 3% below its pre-crisis level in the fourth quarter of 2019. productive than the rest of the employed because they are younger, have less experience and work fewer hours due to his training time,” the Dares stressed.
The statistics service of the Ministry of Labor also suggests that the drop in productivity may be the consequence of “regularizing undercover work” in order to benefit from partial activity, or even from the “retention of labor” by companies, particularly in sectors exposed to contracting difficulties and those in which activity has decreased due to supply difficulties.
The drop in productivity is “quite significant,” Sylvain Bersinger, an economist at the Asterès cabinet, observed in BFM Business. “If this is a lasting trend, it is a problematic trend. Because, in the medium or long term, the increase in wages and growth almost mechanically follow productivity gains,” he continued, although he considered that “this drop in productivity it is rather temporary, rather due to cyclical factors”.
Towards a change of trend in the labor market?
OFCE, Insee, Banque de France… All the forecasters agree that the unemployment rate will rise in the coming months, reaching 8% in 2024. “When you have production that is increasing little but the increase in employment means that labor productivity is deteriorating Many economists believe that this productivity cycle will end” with “companies trying to distance themselves from less productive workers,” says Philippe Martin.
The OFCE economist, Matthieu Plane, also predicts a turnaround in the labor market in the second half of the year: “We believe that we are a bit stagnant and that we will gradually have an increase in the unemployment rate”, for different reasons: reduction of emergency aid, reduction of the budget item, increase in fees or even a less generous learning bonus…
“Very frankly, let’s be modest,” underlines Philippe Martin, before recalling that the “bad news announcers have been wrong several times” about the unexpected trajectory that the labor market has taken in recent months. And to conclude: “economists” still have “quite few explanations about what is happening in the labor market.”
Source: BFM TV
