The French unemployment rate has hit a record high, currently standing at about 11.1% for 2013. In December alone, about 10,200 people listed themselves as jobless. This 0.3% is only a fraction of the 3.3 million who registered as out of work for the entire year, a figure that has never been higher. Additionally, increases in unemployment have been observed across all sectors and also take part-time workers into account. The 5.7% rise in unemployment is unfortunate news for French President Francois Hollande who had previously promised that joblessness would fall by the end of 2013.
The French Labour Ministry has stated that the rate of unemployment appears to be slowing down with 177,800 people joining the jobless register in 2013 compared to the prior year’s figure of 238,000. Despite this seemingly good news, economist Eric Heyer of the think tank OFCE believes that most of the improvement can be attributed to state-sponsored jobs rather than a real recovery in the nation’s economy. “For the private sector to create jobs you need growth stronger than 1%, whereas the government sees growth of 0.9% this year,” he explained. Heyer also expressed doubts that Hollande’s tax plans would prove to be beneficial until about 2016.
On the 14th of this month, Hollande took a pledge to cut 50 billion euros of government spending over the next four years in hopes of stimulating the Eurozone’s second largest economy. The plan also involves phasing out about 30 billion euros of charges paid by companies for family expenses as long as they increase hiring and meet domestic investment targets. The objective behind this reform is that unemployment will decrease as companies commit to hiring more workers. However with other issues stemming from the struggling economy some French citizens have taken to protesting Hollande in the streets. An estimated 17,000 people marched from Place de la Bastille to Les Invalides in France to fight against Hollande’s economic policies. As a president, his approval rating currently stands at a meager 30%.
Despite the slowing of the unemployment rate over the year, it is unlikely that Hollande’s plan to cut budgets and give tax breaks will actually be effective. Even in the strong aerospace sector, the successful company Airbus Group is preparing itself to shed more than 5,000 jobs, 1,400 of these being rooted in France. In prior years aerospace has been one of the sole industries in France that has consistently seen strong demand as many other exporters have lost market shares internationally. With the new “Responsibility Pact” companies are required to hire more people in response to tax breaks, but even so, employees and unions are not certain that jobs can be created based upon targets placed on specific companies alone.
During a visit to Turkey, Hollande stated that “stabilizing, which is what we have done, is not enough.” Sigmar Gabriel, vice-chancellor and economics minister of Germany supported Hollande’s proposals and even compared them to decade old reforms in the country which have contributed to the economic recovery of Germany. As a social democrat, Gabriel strongly encouraged that France follow Germany’s example by instituting close cooperation between trade unions and employers. While a majority of French citizens believe that France should begin to conduct itself economically in a similar manner to Germany, politicians are less open to the idea. The main point of concern for the French is that the German labor market, which includes the nascent increase of low-paid “mini jobs”, has led many people in France to poverty. Additionally, the German tradition of cooperation between trade unions, employers, and the government is not something that France itself possesses. As of now, Hollande is seeking to implement a model similar to Germany’s, but without similar policies in regards to trade and compromise, it is unsure whether his plans will help to improve the French economy.