Amazing resistance of the labor market in France

After the health crisis, paid employment in France grew faster than activity. In the first quarter of 2022, new jobs were created in the French economy, and growth stops.

This is a mystery that even economists are trying to unravel. Despite zero growth in the first quarter, the French economy continued to create jobs. During this period, according to INSEE, France had 20.126 million private sector employees, or 66,000 more than in the last quarter of 2021 (+ 0.3%). And all this in an unstable context against the background of the war in Ukraine and rising inflation.

The labor market has also responded to the health crisis better than expected: the number of paid jobs in the private sector has exceeded pre-crisis levels since mid-2021, while France’s GDP has not yet returned to normal. Thus, at the end of 2021, France had almost 400,000 more jobs than in the same period in 2019.

Falling productivity?

Covid-19, the war in Ukraineā€¦ The resilience of the labor market in the face of crises is as much fun as it is questionable. Because if paid employment grows faster than activity, it means that productivity falls. In other words, today we need “more people to produce what we did two years ago,” said Eric Hayer, director of OFCE’s analysis and forecasting department, last November.

If they do not have a definitive answer, economists still put forward several elements to explain this phenomenon. First, many companies would retain their workforce given the rapid economic recovery following the health crisis. It is becoming easier to keep the workforce because it is encouraged by all the state aid paid by Covid.

Similarly, subsidized employment, in particular through tuition assistance, undoubtedly partly explains the good performance of the labor market during this turbulent period. As well as hiring tensions, which remain very strong and may prompt employers to hire a rare pearl now, despite a book of orders that lacks visibility.

“You see computers everywhere except performance statistics”

For some economists, generalizing telecommuting during a health crisis is also not associated with reduced productivity. Partial unemployment, which still affects 290,000 workers, may also partly explain this, as these figures are taken into account in employment rates, although they no longer produce or produce less.

In fact, in thirty years, productivity has seen only a small increase. Even before the health crisis, per capita productivity increased by only “0.5-1% per year,” said Gilbert Sett, a professor at Neoma Business School. Echoes.

Tertiaryization of the economy is undoubtedly needed. Because the service sector is one of the most used for low-skilled work. However, in the period from the end of 2019 to the beginning of 2022, its workforce increased by 255,800 people, while in industry it decreased by 32,900 people.

However, technological advances and new digital technologies have given hope for a new increase in productivity, as was the case during previous industrial revolutions. That was not the case. This is the famous paradox of the American economist Robert Solow, according to which “we see computers everywhere, except for performance statistics.”

Which leads some experts to argue that statistical models can no longer effectively measure the contribution of technology to productivity. On the other hand, others say that if productivity remains sluggish, despite significant technological advances in recent years, it is because achievements always come after a long time.