For more than 20 years, France has not succeeded in reducing its unemployment rate to below 7%, unlike the rest of the developed countries in Europe. Indeed, it faces essentially structural unemployment
What is essentially structural unemployment?
Essentially structural unemployment is unemployment that persists even when the country’s economic situation is good. Companies that relocate their activities abroad or too often use technological progress to replace human labour are often singled out.
However, the impact of technological progress on unemployment in France is discussed. According to studies conducted by INSEE, offshoring eliminated only 0.3% of paid jobs between 2009 and 2011.
- Lack of labour market flexibility: This makes companies reluctant to create new jobs. Indeed. If these companies need to cut jobs later on, it will be legally and economically complicated and very costly for companies.
- The inadequacy of workers’ qualifications also plays a key role in the lack of business needs. Skilled manpower is lacking, particularly in the IT sector or services to individuals
In 2013, despite more than 20% unemployment, 380,000 jobs would unfortunately not have been filled.
What can be done to fight unemployment in France?
To fight unemployment, the sectors that recruit could possibly be highlighted, and simplify professional retraining.
France could also take inspiration from the Danish flexi-security model, which consists in guaranteeing good unemployment benefits in compensation for the flexibility given to companies to recruit and fire.
Remedies for structural causes must not be limited in any way
Unemployment in France is also increasing due, among other things, to the deterioration of the economic situation. It is therefore partly cyclical.
According to Keynesians, it is therefore necessary to boost household consumption by stimulating it and to boost business investment by reducing taxes, for example. This would increase production and therefore create new job opportunities.
Nevertheless, since the products most consumed in France are mostly imported, most of the jobs created would undoubtedly be abroad. This is why the theory that dominates today is that of the neoclassicals.
The theory of neo-classicals:
Neoclassical theory argues that in order to encourage companies to hire staff, labour costs must be further reduced by reducing employer contributions and limiting wage increases, which were the highest in the euro zone in 2013.
While theories about unemployment exist, they do not provide a miracle cure for problems with complex and variable causes.