After two years of strong growth, job creations stalled in France in the second quarter, perhaps a sign of the beginning of the “landing” expected by economists for several months. According to INSEE’s provisional estimate published on Friday, there were only 19,700 net creations in the private sector this quarter (0.1%), compared to 86,800 (0.4%) in the first quarter.
An estimate to be taken with caution before the final figures known on September 7 – the latest had been revised significantly upwards but “it looks like a landing scenario” for Mathieu Plane, deputy director of the analysis and forecasting department of the Observatory French Economic Conjunctures (OFCE).
While growth was stronger than expected in the second quarter (0.5%), “companies hired less and are beginning to make up for their productivity losses,” he said. “This could be the start of a catch-up in productivity, but it is still much lower than its level before the health crisis”, confirms Yves Jauneau, head of the synthesis and labor market situation division.
Since the end of 2019, employment has indeed “increased much more than activity”, he recalls. It exceeds its level before the health crisis by 6.2%, which represents 1.2 million additional jobs out of the 21.2 million in the private sector.
Even if several hypotheses were put forward – sharp increase in the number of apprentices, retention of labor for fear of recruitment difficulties… – economists “had difficulty explaining the disconnection between strong job creation on the one hand and weak growth on the other” and saw their forecasts regularly contradicted, recognizes Mr. Plane. “There, we have a reconciliation of macroeconomic figures,” he judges.
In detail, “it is mainly the commercial tertiary sector (which concentrates the majority of job creation in France) which explains this marked slowdown” this quarter, underlines Mr. Jauneau. Employment only increased by 0.2% after 0.7% the previous quarter (ie 25,900 jobs after 85,900).
For the second quarter in a row, temporary work, often presented as a leading indicator of the job market, fell back (-0.8%), as did construction (-0.3%) which had hired a lot and is starting to feel the effects of the real estate crisis.
Conversely, industry maintained its moderate growth (0.2%). Even if this does not catch up with decades of deindustrialization, it has created “100,000 jobs” since its lowest level in 2017, underlines Mr. Jauneau.
In its latest economic report in mid-June, INSEE expects 155,000 net job creations over the whole year, with a less sustained dynamic of work-study contracts, at the origin of a third of the creations. jobs for two years.
“For companies, we have entered a rather complicated phase with less accommodating budgetary (end of whatever the cost) and monetary (rise in rates) policies,” explains Mr. Plane. Consequently, “employment can again become an adjustment variable”. But “it will not be brutal, rather a soft landing”, he forecasts, because “tensions on the labor market remain strong”, with bosses still complaining of recruitment difficulties.
Under these conditions, the unemployment rate which will be known on August 11 for the second quarter should remain stable until the end of the year according to INSEE, at 7.1% of the active population. To achieve “full employment”, ie an unemployment rate of around 5%, the government estimates that the economy must create 700,000 to 800,000 additional jobs by the end of the five-year term.
It is also counting on the reorganization of the public employment service with the creation of France Travail, which is supposed to strengthen support for RSA recipients in returning to work, and the negotiation of new unemployment compensation rules provided for in autumn.
