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ECONOMY

Boost for Macron as French unemployment drops to 15-year low

French President Emmanuel Macron received a boost on Tuesday with official figures showing unemployment fell to a 15-year low, as he seeks to push through a widely contested pension reform.

Published: 14 February 2023 16:25 CET
Boost for Macron as French unemployment drops to 15-year low
The stand of Pole Emploi, France's national employment agency, during a job fair in 2012 (Photo by PHILIPPE HUGUEN / AFP)

Statistics agency INSEE clocked unemployment at 7.2 percent in France in the last quarter of 2022, down to its lowest level since 2008. 

The rate in 2008 was the same as a previous low in 1983, leading Macron and some government ministers to claim that joblessness was at its lowest level in four decades.

“Unemployment is at its lowest level for the second time in 40 years,” the president wrote on Twitter. “Target full employment.”

Macron came to power in 2017 promising to reduce France’s chronically high jobless rate through a series of pro-business reforms, including loosening employment law and cutting taxes.

Unemployment at the time of his first election was 9.5 percent.

The centrist government is currently struggling to push through a major reform of the pension system in the face of massive demonstrations and strikes that have seen more than a million people hit the streets to protest on some days.

READ MORE: 5 minutes to understand . . . French pension reform

The changes would see the legal retirement age increase to 64 from 62 and would raise the number of years of social security contributions in order for workers to claim a full pension.

Trade unions have vowed to “bring France to a standstill” in rolling strikes from March 7 unless Macron withdraws the draft legislation which is widely unpopular.

Economist Mathieu Plane from the French Economic Observatory at Sciences Po university in Paris said the latest unemployment figures were a “slight positive surprise”.

Data from INSEE showed job creation was “relatively stable” in the last quarter of 2022 after seven consecutive quarters of growth.

Yves Jauneau, a labour market expert at INSEE, told AFP that the employment rate of people aged 15-64 was 68.3 percent in the last quarter of 2022, “its highest level since 1975”.

READ MORE: OPINION: An inflation ‘tsunami’ is about to hit France

The unemployment figure excludes Mayotte, a poverty-wracked Indian Ocean territory off the east coast of Africa, and the comparisons discount the fall in unemployment recorded during the Covid-19 pandemic when massive state aid guaranteed jobs nationwide.

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ECONOMY

France and Italy face spending rebuke from EU

The European Union was expected to issue warnings to France, Italy and several other governments over excessive spending after new budget rules came into force this year.

Published: 19 June 2024 08:59 CEST
France and Italy face spending rebuke from EU

The rebuke comes at a particularly difficult moment for France, where both the far left and far right are piling up spending promises ahead of snap polls triggered by President Emmanuel Macron’s crushing EU election defeat.

This will be the first time Brussels has reprimanded nations since the EU suspended the rules because of the 2020 Covid pandemic and the energy crisis triggered by Russia’s invasion of Ukraine, as states propped up businesses and households with public money.

The EU spent two years during the suspension overhauling budget rules to make them more workable and give greater leeway for investment in critical areas, like defence.

But two sacred goals remain: a state’s debt must not go higher than 60 percent of national output, with a public deficit – the shortfall between government revenue and spending – of no more than three percent.

The European Commission will publish assessments of the 27 EU states’ budgets and economies on Wednesday, and is expected to point out that some 10 countries including Belgium, France and Italy, have deficits higher than three percent.

The EU’s executive arm has threatened to launch excessive deficit procedures, which kickstart a process forcing a debt-overloaded country to negotiate a plan with Brussels to get back on track.

Such a move would need approval by EU finance ministers in July.

Countries failing to remedy the situation can in theory be hit with fines of 0.1 percent of gross domestic product (GDP) a year, until action is taken to address the violation.

In practice, though, the commission has never gone as far as levying fines, fearing it could trigger unintended political consequences and hurt a state’s economy.

The EU countries with the highest deficit-to-GDP ratios last year were Italy (7.4 percent), Hungary (6.7 percent), Romania (6.6 percent), France (5.5 percent) and Poland (5.1 percent).

They may face the excessive deficit procedures, alongside Slovakia, Malta and Belgium, which also have deficits above three percent, according to Andreas Eisl, expert at the Jacques Delors Institute.

The picture is complicated for three other countries, Eisl said. Spain and the Czech Republic exceeded the three percent limit in 2023 but should be back in line this year.

Meanwhile, Estonia’s deficit-to-GDP ratio is above three percent – but its debt is around 20 percent of GDP, significantly below the 60 percent limit.

The commission will look at the states’ data in 2023 but “will also take into account the developments expected for 2024 and beyond”, the expert told AFP.

Member states must send their multi-annual spending plans by October for the EU to scrutinise and the commission will then publish its recommendations in November.

Under the new rules, countries with an excessive deficit must reduce it by 0.5 points each year, which would require a massive undertaking at a moment when states need to pour money into the green and digital transition, as well as defence.

Adopted in 1997 ahead of the arrival of the single currency in 1999, the rules known as the Stability and Growth Pact seek to prevent lax budgetary policies, a concern of Germany, by setting the strict goal of balanced accounts.

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