France is the world’s most popular tourist destination and sees around 83 million foreign tourists a year. From time to time I am one of them as for a couple of weeks over June and July 2015. While the visit consisted of the usual melange of touristy activities, I was struck by the large numbers of homeless people and begging in Paris and the other towns I visited, perhaps more than any other time I had been there. I also had the unpleasant experience of a military evacuation of the Gare de Lyon Part Dieu while I was in transit to Geneva for a conference at the ILO – a reminder of the tensions besetting that society as it attempts to ensure the safety of its citizens – and tourists – in troubled times.
One of the most difficult and ongoing challenges confronting France however is its persistent high rate of unemployment (le chômage) . On Monday, President Hollande presented his emergency plan for dealing with the continuing high rates of unemployment at over 10% with particularly high rates for youth at close to 26%. Hollande is in the invidious position coming up to an election in 2017 in which unemployment has significantly increased since taking office from Nicolas Sarkozy in 2012 – with 650,000 more people registered with the central employment agency Pôle Emploi.
The frustrations of the French with the situation have also been seen as contributing to the massive vote for the Front National in the regional elections in December 2015.
Hollande’s plan d’urgence consists of an additional 500,000 vocational training places for unemployed people, growth in apprenticeships, and incentives for small to medium enterprises to take on additional workers. The plan also seeks to foster more flexibility of employment conditions including with respect to working time within companies as a way of encouraging jobs growth. (A good summary in English is available on the NY Times website).
The plan is bold, large and expensive at 2 billion euros and has come in for considerable criticism. Time will tell whether or not it will have any effect in reversing the current trends and reversing President Hollande’s fortunes.
In this regard, I was greatly interested in an article published in Le Monde Les pistes d’économistes pour faire baisser le chômage (the economists’ ways of reducing unemployment) a few days ago outlining the various positions of economists on the effectiveness of responses to unemployment. The article notes that unemployment has been high in France for much of the last 40 years barely ever going down below 8% and is now close to historically high levels. In addition, youth unemployment is especially high in France with very large numbers of young new entrants to the labour market each year – 30% more than in Germany.
There has been little that successive governments both socialist and conservative have been able to do about it. The article then examines the various mainstream strategies for dealing with unemployment. None of these, I note, consist of direct job creation through the public sector.
- Reducing wages specifically the minimum wage which in France is one of the highest in Europe. Not surprisingly the economists consulted argue that the high minimum wage is an obstacle to hiring although the ABC’s fact check on this issue suggests that it is not a very strong factor in reducing unemployment. It is not part of Hollande’s plan.
- More and better targeted training along the lines that President Hollande has recently announced. The verdict by the experts on the efficacy of this approach is not very encouraging with questions raised about whether more training corresponds to needs and whether there is real value from the vast additional expense.
- Increasing apprenticeships for young people along the lines of the German model which has been very successful. However the experts say that France cannot be compared with Germany where population ageing is more advanced so there is greater opportunity for younger people to step up into enterprises for on the job training. It is also noted that the German enterprises themselves have considerable control over vocational learning in Germany so training systems are very closely oriented to business need.
- Encouraging the growth of small business and start ups. One economist says that there are barriers in France to new players in certain sectors of the economy.
- Reducing unemployment payments especially the length of entitlement of insurance payouts and to increase activation requirements. This accords with the tough and punitive welfare to work approaches in anglophone countries including the UK, Australia and the USA where unemployment payments are highly conditional on high level job search. This is not in Hollande’s plan.
- Simplification and better evaluation of measures to reduce unemployment.
The article points to the enormous complexity and difficulty of reducing unemployment in a country where structural (as opposed to cyclical) unemployment has been high for most of the last 40 years. This was consistent with my own analysis of youth unemployment in Australia which has hovered around 13% since the late 1970s.
Mr. Hollande’s emergency plan is a major quest to do something about unemployment. I hope for the sake of the unemployed people of France, including the desperately poor who I saw last year, that it has some success and serves as a road map for other countries struggling with high levels of unemployment years after the GFC. While Australia’s unemployment rate is much better it is still high at close to 6% and must be seen in relation to our high level of underemployment (insufficient hours of work) at around 8% so a total of 14% of the workforce with no or not enough work and that doesn’t count all those who have given up looking. Australia also has exceptionally high rates of casual employment.
As a footnote, I met a young woman, a stall holder, at a street market outside the Gare de Montparnasse in Paris last year. She was in her mid 20s and explained that despite her skills and her university degree she thought there was little hope for her to find a professional job. She made a living as a waitress and selling second hand goods at the street market. She also expressed deep frustration with the situation in France and, bizarrely hoped she could come to Australia to work. It is hard to see how exactly the President ‘s plan d’urgence will help this young woman. Jobs growth is really the key.