Crisis in France: Hollande Failing to Handle Unemployment

By Stefan Simons

Job seekers wait in line at a Marseille office of the National Agency for Employment. Zoom
REUTERS

Job seekers wait in line at a Marseille office of the National Agency for Employment.

France has long had a chronic problem with unemployment, but the current jobless rate is especially dismal. The government has introduced several employment programs, but they're not taking effect quickly enough to convince the country things will get better.

Ten months after the election of French President Francois Hollande, the number of people registered as unemployed is nearing the national record set in 1997, at just below 3.2 million. Nearly 2 million have been searching for work for more than a year, and every month an additional 80,000 people lose their claim to unemployment benefits, often falling into poverty.

Unemployment is 10.8 percent higher than last year -- a harsh blow to Hollande, who promised during his campaign to curb the crisis on the job market. Instead, the jobless rate has steadily risen, bringing to memory a statement made in 1993 by Hollande's predecessor and fellow Socialist, Francois Mitterrand: "Against unemployment, we've tried everything."

In anticipation of catastrophic new reports on the labor market, Prime Minister Jean-Marc Ayrault told the National Assembly on Tuesday that one "has never done enough against unemployment," calling for "a general mobilization" to create jobs in the public and private sectors.

The government has taken a number of measures to combat youth unemployment, such as generous subsidies to companies that hire employees between 16 and 25 for at least one year. The plan was to create 100,000 "contracts for the future" in 2013, but so far only 15,000 people have benefited from the program.

Long-term Prognosis Equally Dismal

Hollande had also hoped the job market would get a boost from "generation contracts," which win subsidies for small companies that hire a younger person while still committing to keep an employee over 57 on the payroll. The scheme is meant to allow seniors to keep their jobs while passing on their skills and knowledge to younger talent. The government hopes to sign a half a million of these contracts over the next five years. It also hopes an additional 2,000 employees at the National Agency for Employment will help mediate these contracts.

In contrast to Mitterrand's time in office, the Socialists today are not facing the end of a crisis. They're preparing themselves for long-term stagnation instead. An expert at the Organization for Economic Cooperation and Development (OECD) in Paris said early this year "we're standing before a tendentious worsening of the labor market with historic peaks."

A turnaround is not yet in sight, though. France will start creating more jobs only once the economy starts growing by more than 1 percent, the OECD says. But the National Institute of Statistics and Economic Studies projects the economy will stagnate in the first trimester of 2013. Similarly dismal are the expectations for growth in savings, investment and household purchasing power. Reports of layoffs, buyouts and bankruptcy declarations are a near daily occurrence.

Unrealistic Goals

In order to reach the target of 0.8 percent growth this year, France's economy would have to expand in the latter two-thirds of the year by about 2 percent -- a value economists believe is unattainable. Labor Minister Michel Sapin himself warned that unemployment "will be bad for several more months before our policies take effect."

While the government blames the general economic woes on the euro crisis, the conservative opposition accuses President Hollande of undermining confidence in the economy with a draconian "tax shock," coupled with an initial increase in public spending followed by a sudden halt.

And it's not just company executives who are critical. A poll over the weekend by the CSA polling institute found that 68 percent of the country is pessimistic about the state of the nation. "In light of this situation," CSA analysts said, "there is an emergency of spontaneous criticism of the government, whose measures appear to increase France's fears for the future."

The negative atmosphere has also hit President Hollande, whose approval ratings have reached historic new lows. He plans to increase the appeal of his government with an appearance on the France2 broadcaster on Thursday. Labeled a "conversation with the president of the republic," Hollande wants to convince the country he can still turn the economy around. But in light of near-record unemployment figures, it will be an enormous challenge.

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