France is, like many other European nations, facing relatively high unemployment. According to the Financial Times, over 10 per cent of the French labour force is unemployed, and that proportion jumps to nearly a quarter if we look solely at those under the age of 25. In all, there are a record 3.5 million people out of work in the Eurozone’s second-largest economy. This is bad for those unemployed and looking for work and it is bad for French President Francois Hollande, who is hoping not to join those looking for work in 2017 when the French presidential elections are held. The trouble is, M. Hollande has vowed not to run for president a second time if unemployment does not decrease by the end of his five-year term.
Luckily for the President, France Stratégie, a government-affiliated think-tank, has recently published a report on demographic changes and the future unemployment rate. The Financial Times reports that:
“The study – which was conveniently released the day after the government announced a rise in jobseekers for March – predicts that on average, 619,000 jobs will be freed up each year by French workers going into retirement.
This is potentially huge: Retiring baby boomers, born in the three decades of prosperity that followed the Second World War, are expected to account for roughly 80 per cent of all jobs up for grab between now and 2022. That is up from 411,000 a year in the mid-1990s, and up from 565,000 during the presidency of Nicolas Sarkozy, who was defeated by Mr Hollande in 2012.”
According to France Stratégie, if the French economy was to grow by 1.4 per cent annually until 2022, the unemployment rate would drop to under 8 per cent. Even under the “worst-case” scenario (annual growth of only 1.1 per cent) the unemployment rate will still decline slightly in 2022, to 9.7%. (This worst-case scenario sounds pretty bad, another 7 years of about 10 per cent unemployment!!)
Although France is not unique in the fact that it will have thousands of retiring workers in the next few years, it does stand out because, unlike Germany, France has a birth rate at near replacement level (2.01 children per woman). Thus, France has a healthier long term growth potential and therefore the ability to create jobs. In contrast, Germany is expected to lose around three-quarters of a million jobs by 2025 due to its declining population (which we talked about last week here).
Interestingly enough, in France the jobs that are vacated by retiring workers and need to be filled are not the High-wage, high-skill jobs you might expect. Instead, “the single-largest category affected by retirements will be cleaners, of which France will need 350,000 new ones by 2022”.
While M. Hollande might be sweating the unemployment figures over the next couple of years, France’s relatively stable demographic outlook is one glimmer of good news. The large baby boomer cohort will be retiring and freeing up employment opportunities over the next few years. Further, France’s birth rate has been high enough so that the country is not facing demographic and economic decline, unlike its large eastern neighbour.