Why employment in France recovered faster after Covid than in most of our neighbors

While the United States and Britain have fewer working people than before the crisis, France is one of the countries that has seen its active population grow the most in two years.

Lack of manpower in the catering, hotel and construction industry, seasonal workers lack subscribers this summer … The situation in the French labor market is worrying. The “no job” that the country has known for decades has changed to “no arm” since the end of the health crisis. At least in some areas.

Paradoxically, however, the French labor market is doing well. The unemployment rate is at 7.3% of the working population at its lowest in 14 years, and the employment rate (share of people in employment over a given population) reached 68% in the first quarter, the highest level since 1975, the year of the first INSEE measurements.

When we compare these figures with other OECD countries, France is even an exception. The country is one of the few that has erased the decline in the labor market in connection with the health crisis. According to the organization’s statistics published in May, the proportion of the active population (employed or unemployed) among the 15-64-year-olds has even increased in France compared to before the crisis. It was 72.5% at the end of 2019, that is 73.3% at the beginning of 2022, an increase of 0.8 points.

After falling to 70.9% in the second quarter of 2020 at the height of the health crisis, it has since gradually risen to exceed pre-crisis levels during the second quarter of 2021.

Britain’s concern

This is far from the case for all countries, as shown in the graph below. On average in the OECD, the share of the working population fell between the end of 2019 and the beginning of 2022 by 0.2 points. Within the G7, three countries have still not returned to pre-crisis levels: Italy (-0.2 points), the United States (-0.5 points) and, above all, the United Kingdom (-0.9 points).

In this group of economic superpowers, France is the country that performs best after Germany (+1.2 points) and equal to Canada.

A situation that tends to be resolved in most major economies with the notable exception of the United Kingdom. The proportion of working people in the total population has continued to decline since 2020 across the Channel despite the lifting of health restrictions and the economic recovery. An emigration of workers who worry the country.

“[Le Royaume-Uni est] one of the very, very few countries in the world that has seen what looks like something of a structural change in participation [au marché du travail], notes Tony Wilson, director of the Institute for Employment Studies at CNN. Of particular concern is the growing number of people leaving the labor market due to illness.

The ability to draw on their retirement savings from the age of 55 is one of the reasons put forward by British researchers. The Department of Tax Studies estimates that premature retirement among the population aged 50-69 will explain two-thirds of the increase in inactivity over the past two years. An increasing problem with the difficulties of exploiting the pool of European immigration. The number of EU citizens fell by 211,000 people compared to 2020.

The French exception

Furthermore, France is an exception. Although the country experienced a decline in its activity rate during the crisis (70.9% in the second quarter, a decline of 1.6 points), it has since risen much faster than in most OECD countries. At the same time, unemployment fell from 8.1% of the working population at the end of 2019 to 7.3% at the beginning of 2022. In other words, many more French people are active and in employment than before the crisis.

How can one explain such a rapid recovery in France? The question fascinates economists who are more accustomed to commenting on the sluggishness of the French labor market, which is generally less quick to recover from crises than neighboring countries.

“We will have to take a step back to analyze all of this,” said economist Gilbert Cette, a professor at Neoma Business School. We have a few hypotheses: The first is that it is the counterpart of the very generous compensation system in France under Covid, which attracted people who were in informal work.

During the health crisis, it was obviously necessary to be declared to receive assistance such as partial unemployment or the Solidarity Fund. A high level of protection that could have attracted wage earners and the self-employed from the underground economy, which has inflated the official rate of activity in the country.

Work survey inflates the number of active workers

The second hypothesis relates to the very sharp increase in the number of apprenticeships. The apprenticeship reform 2018 as well as significant subsidies from the state since the beginning of the school year 2020 (otherwise very expensive for public finances) have raised the number of apprentices to an unprecedented level. According to Dares, their number has doubled in two years, from 369,000 in 2019 to nearly 732,000 in 2021. nonetheless, work-study students have increased in total from 587,700 in 2019 to 852,300 in 2021.

Although this strong growth in work study may have contributed to the decline in youth unemployment (20.5% in early 2020 to 16.3% in 2022), it has in any case mechanically inflated the employment rate. A student in education is considered inactive while an apprentice is active.

It notes INSEE in a note on the financial situation.

“This sharp increase in the number of work-study contracts clearly supports the increase in the employment rate and the employment rate among young people,” the Dares said. “1% were already in training or job-seeking. It can therefore be estimated that a large proportion of the recipients of these contracts come from inactivity at work.”

If France is still far from full employment unlike many of our neighbors, the country has shown once is not custom and use an unprecedented resilience in the field.

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