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French employment 2020: Five priorities for action

By Eric Labaye, Charles Roxburgh, Clarisse Magnin, and Jan Mischke

Unemployment is rising. Unless it comes down, France won’t be able to sustain its beleaguered social safety net.

France’s labor market has been relatively resilient in the face of the global financial crisis of 2008 and 2009 and of the sovereign-debt crisis, which gathered full force last year. But unemployment has begun to rise again. Achieving a considerable boost to employment is now critical because it is difficult to see how, without reversing this decline, France can sustain a social safety net that is already under significant strain.

Until the 1990s, France was among Europe’s leading economies in per capita GDP. By 2010, however, the country had dropped to 11th out of the EU-15. Low labor force participation of seniors and young people, as well as high unemployment rates are the main drivers of this per capita GDP gap.

A report from the McKinsey Global Institute finds that to meet even moderate ambitions for employment and prosperity, France must create more than twice as many net new jobs annually as it did during the past 20 years.

Unless France acts, by 2020 it may face a shortfall of 2.2 million highly skilled workers, and 2.3 million low-skilled workers will be unable to find jobs. Addressing this intensifying structural mismatch of skills is required to increase employment.

french employment 2020

Drawing on European best practices, the report recommends that France should set five priorities for its 2020 labor agenda:

  • reform labor market conditions for seniors to increase their level of workforce participation
  • boost the overall skills of students and workers and better adapt their skills to the knowledge economy’s market demands
  • improve labor costs and the flexibility of the labor market
  • support job-creating growth for the high- and low-skilled alike
  • improve mechanisms to ensure that employment policies are effective and efficient
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