Friday, June 5, 2015

France's retirement boom may not be enough to create jobs

French politicians looking ahead over the next decade or so have for a long time assumed that the retirement boom - resulting from the high birth rates in the decades after the war - will be the chief answeer to the country's high unemployment. As an estimated 10 million French give up work and enter retirement, their places will have to be filled - so the argument goes.

A recent report* however has taken a more cautious view and thrown into doubt the idea that the retirement boom alone will solve France's high unemployment. The report offers three possible scenarios, cautious, moderate and optimistic and in the worst-case version unemployment in 2022 could be as high as 9.7% (with just over 1 million jobs created); the 'central version' suggests the creation of some 1.8 million new jobs and an unemployment rate of 7.9%; while the most optimistic version talks of 2.1 million new jobs and unemployment at 6.7%.

What are the reasons for this? The analysts suggest that inevitably the demand for certain types of workers are likely to decline, citing in particular industrial and manufacturing jobs, work in agriculture and the lowest category (C) of employees in the public sector. They also suggest that among the self-employed and owners of the smallest businesses (cafés, restaurants, small shops etc) when the owner retires, the business tends to close and disappear from view.

The only sector likely to recruit in large numbers is that of 'home helps' but the researchers note that this type of work is regarded as unattractive and low-paid and may even fail to attract the unemployed. Generally unskilled and medium-skilled jobs requring few specialist qualifications - sales assistants, drivers, cleaners - will decline due to streamlining and automation.

Among the remedies being discussed are shorter working hours (!) and the researchers note that the introduction of the 35 hour working week in France generated over 2 million jobs between 1998 and 2001.

* 'France Stratégie" as reported in "Alternatives Economiques" no. 347 June 2015.