Unions sceptical about announced drop in unemployment rate

Unemployment figures released in June and July indicate that the unemployment rate has fallen significantly to 9% of the active population. Overall, the number of job seekers has decreased by 100,000 people in April, May and June. However, the trade unions have declared that these results should be analysed with caution and want to know the reality that may be hiding behind the figures.

On 30 June 2006, Jean-Louis Borloo, Minister of Employment, Social Cohesion and Housing (Ministre de l’emploi, de la cohésion sociale et du logement), presented the figures for unemployment in May; this was followed by the figures for June, presented on 28 July. In June, an overall unemployment rate of 9% was recorded, measured according to the International Labour Organisation (ILO) method and seasonally adjusted. This represents a one percentage point decrease in the unemployment rate over one year (10% in June 2005).

The Prime Minister, Dominique de Villepin, has joined Minister Borloo and Thierry Breton, Minister for the Economy, Finance and Industry (Ministre de l’Économie, des finances et de l’industrie), in welcoming the substantial decrease in unemployment and subsequent decline in the number of job seekers. In May, the number of job seekers fell by 45,000 people, which represents a decrease of 2.2% of unemployed people in one month; figures for June showed a reduction of 26,500 job seekers, representing a further decrease of 1.2% in the proportion of unemployed people.

Analysing the results

Unemployment figures can vary depending on expectations, sources and calculation methods. In essence, two types of indicators are used to analyse the impact of labour market policies on employment trends, namely: the number of job seekers and the volume of job creation.

Job seekers

In the view of Minister Borloo, the decrease in the number of job seekers is a result of recent government policies to boost employment that include the following initiatives:

• the development of a social housing programme;

• the development of a home-services sector (FR0505107F);

• special training contracts (partnerships between higher education institutes and companies);

• the reform of state employment placement services (FR0601105F);

• the creation of a ‘new recruitment contract’ (Contrat nouvelles embauches, CNE), available to companies with less than 20 employees (FR0507103F).

According to official research (in French, 90Kb PDF), the decrease of job seekers in May 2006 could be explained by a decrease linked to the three main reasons given for registering as a job seeker with the National Employment Agency (Agence nationale pour l’emploi, ANPE), namely redundancy (-33.5%), termination of a fixed-term contract (-9.1%) and termination of a temporary employment contract (-6.1%).

In May, ANPE also recorded a decline in initial registrations as job seeker: -9.1% compared with the first quarter of 2006, although this figure has risen by 0.3% over a 12-month period. It should be noted that mainly university students and school leavers register as first-time job seekers with ANPE.

Job creation

Looking at job creation, Minister Borloo stated that ‘the economy was well on the way towards the creation of some 300,000 jobs’ in 2006.

This outlook is underlined by the fact that the number of companies filing for bankruptcy has declined by over 6% in the course of a year, according to the National Institute of Statistics and Economic Studies (Institut national des statistiques et des études économiques, INSEE).

Figures on the creation of new jobs through the setting up of new companies vary significantly depending on sources. During the first quarter of 2006, according to INSEE, some 15,000 new jobs were created as a result of business creation, while the National Union for Employment in Industry and Commerce (Union nationale interprofessionnelle pour l’emploi dans l’industrie et le commerce, UNEDIC) reported 48,000 new jobs.

Reaction to employment situation

Commenting on the unemployment figures, the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) believes that it is necessary to take into account the overall economic and social situation and the readjustment of the minimum wage (FR0607019I). President of CFDT, Annie Thomas, hopes that UNEDIC will come to ‘an agreement and an adjustment of unemployment benefits after two lean years’.

Although the French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC) welcomed the decrease in unemployment, it declared that ‘we must wait to see if this reduction in unemployment will result in job creation across economic sectors’. The current situation regarding the CNE law proves that ‘increased flexibility is not a genuine solution to unemployment’.

The French Confederation of Professional and Managerial Staff – General Confederation of Professional and Managerial Staff (Confédération française de l’encadrement – Confédération générale des cadres, CFE-CGC) has called for ‘caution before declaring victory’ particularly at a time when ‘redundancy plans have been piling up, especially in manufacturing – DIM, Kodak, Faurecia, Heuliez…’.

The General Confederation of Labour (Confédération générale du travail, CGT) is also sceptical, wondering whether this is ‘information or propaganda’. The confederation also highlights that at present, ‘411,000 workers who have been laid off by companies and who are aged 57 years or over are no longer classified as job seekers’.

In the opinion of the General Confederation of Labour – Force ouvrière (Confédération générale du travail – Force ouvrière, CGT-FO), this ‘statistical vision does not reflect the country’s current economic situation’ and ‘we could also note that the number of unemployed people who have been taken off unemployment benefit schemes has gone up by almost 11%, with more than 8% for administrative reasons’.

Moves towards closer social partnership

In July, just a year after her election (FR0508102N), Laurence Parisot, President of the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), announced to an audience of a million employers that she had asked the major trade unions for a meeting in order to work together on the following issues for 2006:

• the job market;

• the respective roles of the state and of the social partners;

• a comprehensive assessment of the economy.

Benoît Robin, Institute for Economic and Social Research(IRES)