This is the third part of an FT series that analyzes how the Covid-19 pandemic went transformed the labor market and has changed the way millions of people think about work
Aubérie Zaro left her Big Four consulting job in Paris in January determined to take time to think about what she really “wants to do”. After a nine-month hiatus from the job market, the 30-year-old began looking for a new job. To her surprise, within a month, she found one that matched her goals.
“I thought with the pandemic all appointments could be frozen, but it was very quick,” she said.
Zaro’s rapid and successful job search is one that thousands of French workers have experienced in recent months. As in most developed countries, they benefited from generosity government support for businesses en a sharp economic recovery, which helped bring the unemployment rate – those without a job but actively looking for work – back to pre-pandemic levels of 8 percent.
But unlike the UK and the US, where record numbers of people left the workforce, France and a few other EU countries also avoided the trend known as the “Big Quit”: the ratio of French working people looking for work or work rose to 74 percent, a record high.
Such trends have raised hopes that the post-pandemic economic boom could be a step-by-step change for countries such as France, which has long experienced high levels of structural unemployment.
“Perhaps the conditions have finally been met to reduce the unemployment rate,” said Stefano Scarpetta, director of employment, labor and social affairs at the OECD. “The recovery in the French economy was 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 – either rejoin the workforce or leave it in lower numbers than in other developed economies.
As part of France’s € 100 billion Recovery plan, or Recovery Plan, thousands of companies have received financial assistance to help them retain existing staff and, in some cases, hire more people. In contrast, the U.S. supported workers’ incomes by providing them with additional benefits directly.
This system of assistance has enabled Nicolas Sordet, head of Lyon-based chemicals start-up Afyren, to add 45 new staff. The € 7 million promised by the state was a “catalyst” to invest in the development of a new factory in northern France that would produce fertilizer from agricultural waste, he said.
Reforms that preceded the pandemic by more than a decade – and continued by President Emmanuel Macron – also played a role. Measures such as a € 10 billion reduction in business tax and lower redundancy costs have made it more attractive for businesses to hire staff, economists say.
Macron policies that targeted the young people also had an impact, including a scheme that provided 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 it remains low in absolute terms, at 33 percent.
Macron, who promised early in his premiership to reduce France’s unemployment rate to 7 percent from 9.5 percent, used a national address this month to justify his Whatever the cost, or “Whatever it takes”, pandemic strategy, arguing that it made it possible “not only to resist the crisis, but to return stronger”.
But economists are divided over how much credit Macron can take to restore the labor market, and concerns about its underlying health continue.
France’s unemployment rate – 8.1 percent in the third quarter – is still much higher than in the UK – 4.3 percent for the same period – or Germany – 3.4 percent. French companies also report that they are having difficulty finding staff – although this is a long-term structural issue date the pandemic.
Philippe Martin, professor of economics and deputy chair of the French Council for Economic Analysis, 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 it is a relatively structural problem, which is here to stay.”
Employment among older workers has improved over the past year. Although about two-thirds of 50- to 64-year-olds are in work – more than 10 percentage points compared to a decade ago – France still has one of the youngest effective retirement ages in the world, at an average age of 60.8 .
FT Series: Where did all the workers go?
Features in this series include:
Part 1 How to reduce migration and early retirement the workforce shrank
Part 2 The link generation: American workers posts in record numbers resigned
Part 3 Back to work: French workers resist post-Covid ‘big stop’
Part 4 Pandemic ‘side session’ lingers for working women in emerging markets
This partly explains why France’s workforce did not shrink in the same way as in other countries when their economies reopened.
Many of the people who made up the US and UK’s Big Resignation ‘were middle-aged or older and simply decided to retire earlier than they had planned. In France, the number of aging 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 young people and that France’s early retirement age is preventing companies from investing in older workers.
“There is clearly a need for a wake-up call and a major overhaul of technical and mathematical skills, because we are going to pay dearly,” he said.
Another concern is that French employment is rising faster than the economy is growing, which could indicate declining productivity.
“It is not good news that we are creating many new jobs, but with low levels of productivity. That means the average quality of jobs is going down, ”said Patrick Artus, chief economist at Natixis. “The big problem we are facing is skills and I do not think it has improved under Macron.”