Unemployment in France

Unemployment in France
”I promise to reduce to 5% the unemployment in five years with an unemployment average reduced to 5 months because I am convinced the full job is applicable. English people did it” (Nicolas Sarkozy, 2007… Several months before the fall of Lehman Brothers)

Unemployment rates
France 04/2012: 10.2%
European Union 07/2012: 11.1%
UK 05/2012: 8.1% (5.4% in 2007)
United States 10/2012: 7.8% (4.6% in 2007)
Japan 02/2012: 4.5% (3.9% in 2007)
Spain 08/2012: 25.1% (8.3% in 2007)
Greece 08/2012: 24.4%

The Labour Market: Demand and Supply * The labour supply is made up of workers offering their labour force for a given wage (NOT the employment supply from the employers); * The labour demand corresponds with the application of labour force by the employers for a given wage (NOT the employment demand from the workers). * When the supply overtakes the demand, a part of the workforce, deprived of job, is unemployed.

Definition from the ILO (International Labour Organization)
“Unemployment is defined as people of working age who are without work, available for work, and actively seeking employment” (ilo.org)
Unemployment rate is defined by the number of people who are unemployed expressed as a percentage of the labour force (=population active).
According to the ILO, unemployed includes all of them which, during a reference period, hold simultaneously the three following features: * To be without labour, this means without salaried job or no salaried. * To be available to work in a salaried job (i.e. not to have worked during a given period). * To be in search of a job, this means that we have to take special arrangements during a recent period to look for a salaried job or no salaried. For France, that means to actively search for a job.
For France 2012
People that meet these 3 criteria: 3 million
People that meet 2 criteria (except the 2nd): 4.7 million
There is a Halo Around Unemployment: “some people wish to work but are ‘classed’ as being inactive either because they are not immediately available to work (within two weeks) or because they are not actively seeking work). People who fall into these categories form what is known as a ‘halo’ around unemployment” (INSEE).
Examples of elements entering this Halo: underemployment, part time workers who want to work more, occasional and crossover with inactivity workers, etc.
Different shapes of unemployment
The frictional unemployment, it results from the period which separates the moment when an individual leaves his employment and the moment where he finds the other one; the consecutive unemployment in the time of expectation of the first employment is included in the frictional unemployment. The causes of such unemployment can be structural, implying an increase of the period of expectation of a new employment: in that case, it’s better to assimilate this shape of unemployment to the structural unemployment.

In an economy of full employment, the unemployment is not useless: the frictional unemployment is permanent. * Structural unemployment is a long-term unemployment. It results from socio-economic structures of the country (demographic imbalance, ageing of the productive device, rule inefficient, maladjustment of the qualifications of the workforce to those whom requires the employers…) * Cyclical unemployment is temporary. It is the consequence of a slowdown in the economy.
Hidden unemployment
Hidden unemployment consists in several different groups of people: * People who have been unemployed for such a long-time that they have given up seeking a job (have lost hope to find a job). * People who have a part time job but would really like to be working full time: underemployment cf. Halo around unemployment). * Very over-qualified workers searching for another job more relative to their high qualifications.
Focus on some populations facing specific issues * Long term unemployed people * Young people * Unemployment and gender * Skills & qualifications * But there are other discriminations: handicapped people, ethnic or geographical disparities, etc.
Long-term unemployment
Long-term unemployment is one of the main concerns of policymakers. Apart from its financial and social effects on personal life, long-term unemployment negatively affects social cohesion and, ultimately, may hinder economic growth. Some 3.0% of the labour force in the EU-27 in 2009 had been unemployed for more than one year; half of these, 1.5% of the labour force, had been unemployed for more than two years (Eurostat)
Youth unemployment
Youth unemployment rates (people aged from 15 to 25 years old) are generally much higher than unemployment rates for the total population. It’s not necessarily mean that the group of unemployed persons aged between 15 and 24 is large. Many young people are studying full-time and are therefore neither working, nor looking for a job, so they are not part of the labour force.
Gender unemployment
Historically, women have been more affected by unemployment than men.
For the first time since the calculation of EU-27 unemployment started (in 2000), the rate for women was lower than for men in 2009. Male unemployment rates were higher than the corresponding rates for women in 14 out of 27 Member States. In the euro area, the unemployment rate for women remained higher than the male rate. The gender gap between male and female unemployment rates varied from -6.3 percentage points in Greece to +6.9 percentage points in Ireland.
Youth unemployment
The youth unemployment rate in the EU-27 was more than double the total unemployment rate in 2009. At 19.6%, almost 1 out of every 5 young persons in the labour force was not employed, but looking and available for a job. In the euro area the youth unemployment rate was marginally lower at 19.4%. The unemployment rate among young persons was higher than among those aged 25-74. In Spain, Latvia and Lithuania, youth unemployment rates are particularly high. The Netherlands was the only Member State with a youth unemployment rate below 10%.
Qualifications and unemployment
Educational qualifications are of use to job-seekers, as unemployment rates tend to decrease the higher the level of education attained. This characteristic was noted in almost every Member State in 2009, as the average unemployment rate in the EU-27 for those having attained at most a lower secondary education was 12.8%, much higher than the rate of unemployment (4.5%) for those that had obtained a tertiary education qualification.
Voluntary/involuntary unemployment * Voluntary unemployment results from the refusal of the unemployed persons to work for the salary which would insure the balance between the job supply and demand. At a given wage level, people prefer see their leisure time raised rather than their wage. Transfer payments may influence households’ choices. * Voluntary unemployment and frictional unemployment establish then the natural unemployment. This perspective is rather the one of the liberals. * Keynes, on the other hand, held the hypothesis of an involuntary unemployment, bound to the incapacity of the actual demand (effective demand) to meet the labour supply. Equilibrium between supply and demand is then an underemployment equilibrium. * For other authors, involuntary unemployment is the result of the rigidity on the labour market (liberals).
Liberal Measure: flexibility
According to the neoclassical theories, unemployment is caused by rigidities in the labor market. Labor supply stems from workers. In fact, workers make a choice between the work and leisure.
Labor supply is an increasing function of real wages.
The demand of labor firms depends on marginal productivity: employers hire to the point where profits, allow him by a supplementary unit of work to compensate the cost of supplementary work.
Labor demand is a decreasing function of real wages.
Labour market Rigidities * Minimum wage: in France in 2006, the minimum wage, on the basis of 35 hours per week, is about 1050€. * Unemployment redistribution system (higher and longer than in the UK: 24 vs 4 month-payments). * Fiscal policy. * Social deductions and helps.
The precarious employment
3 types: * Fixed term contracts * Temporary work (Interim) * Part time jobs
Fixed-term contracts
Fixed-term contracts are, according to the Insee’s definition contracts whereby an employer recruits a salary for a limited term.
Today, the undetermined-term contracts tend to be forced and replaced by fixed-term contracts. France does not break this rule.
E.g.: In buildings, firms hire more and more fixed-term contracts in order to face to the cyclical problems.
Temporary work (Interim)
Interim knows his strongest increase since 7 years. The interim is rising in all sectors. During the first trimester 2007, the interim work increased by 9.8%.
Agriculture (26%), Industry (14%), Construction (11%), Tertiary (10%), all the Sectors (12%)
Piore and Doeringer Model, 1973
There are two Labour markets: the primary market and the secondary one.
The secondary market can be defined as a market where the salary is fixed by confrontations between supply and work demand. It welcomes low-skilled employees, the precarious jobs uses.
The primary market can be defined as a market where the salary doesn’t constitute the main modality of the workforce’s adjustment. It welcomes more qualified workers such as the executives, senior executives. The persons who work on the primary market have even more chance to climb up the social ladder.
The dualism’s theory also shows that these two markets are relatively hermetic. Indeed, it remains difficult for a secondary market worker to pass towards the primary market.