Employment level grows as president benefits from reforms begun by François Hollande

5 hours ago by: Zosia Wasik in Paris

For years Seeb, a small French company that installs electric wiring in commercial property, has been laying off workers. Franck Dattée, Seeb’s chief executive, is at last able to do the opposite.

“Since June we have had extraordinary demand . . . I am recruiting many people on many levels: managers, workers, team leaders,” says Mr Dattée, who is adding 10 people to his team of 40. Compared with last year, his company is bidding on twice as many tenders for jobs and the number of new projects has grown rapidly, he says.

Companies such as Seeb are at the heart of a revival in the French economy. For years France has lagged behind eurozone rivals such as Germany in creating jobs, with unemployment remaining stubbornly above 10 per cent for five years. Across the Rhine, joblessness has been reduced to levels last achieved at the time of German reunification two decades ago.

Now finally there are signs of life in the French jobs market, too. With companies such as Seeb starting to take on staff again, employment in the construction sector grew in the first quarter of the year — the first time since 2012. Unemployment fell to 9.6 per cent in the first quarter of 2017 as the country captured some of the unexpectedly strong economic revival in the eurozone. Insee, the French statistics agency, predicts gross domestic product will grow 1.6 per cent this year, the fastest since 2011.

For Emmanuel Macron, who swept to the French presidency in May promising to fix the economy, the momentum is propitious. Analysts say Mr Macron is benefiting from labour market reforms begun under François Hollande, his deeply unpopular predecessor in the Elysée Palace.

“GDP growth in France remains quite low . . . I think that the main reason why the job market is recovering is the reforms that the previous government implemented,” says Nicolas Bouzou, head of Asterès, an economic research centre.

The question is to what extent Mr Macron, who as economy minister played a part in some of the reforms under Mr Hollande, can build on those incipient reforms and put the French labour market on a structurally firmer course.

As the International Monetary Fund has pointed out, France’s unemployment is exacerbated by rules that discourage companies from hiring. Employees are very well protected by the law and trade unions, and firing workers is difficult and often costly.

Mr Hollande’s flagship programme focused on decreasing labour costs for employers. Nevertheless in 2016, the cost of employing workers — measuring tax and social security contributions as a proportion of salary — was the fourth-highest among the rich countries that belong to the Organisation for Economic Co-operation and Development.

The Hollande reform of labour taxes was “very simple policy, it is not very complex, but it works”, says Mr Bouzou. “It is not sufficient. We should have many, many reforms in the field of job regulation, long job training and so on.”

Mr Macron has made further liberalisation of the labour market central to his economic plans. His government is debating a new labour code that he wants approved after the summer holidays. The 39-year-old reformer wants to cut unemployment, give more flexibility to private employers over employment regulations and create more training opportunities to make sure jobseekers can take advantage of market demands.

This last is important given evidence of the mismatch between jobseekers and vacancies. Pôle Emploi, the national unemployment agency, says 80 per cent of companies that are looking for workers find it difficult to recruit, owing to candidates’ inappropriate education, experience or motivation.

Nevertheless the increase in business confidence is encouraging. Pôle Emploi’s annual survey shows that hiring intentions among French employers are up 8.2 per cent compared with last year. In construction — a bellwether of activity — the figure is 22.5 per cent higher than last year.

RegionsJob, one of France’s largest job agencies, has 40 per cent more job ads on its website than a year ago, with the biggest increases in the property, technology and construction sectors.

Recruiters and experts ask themselves how long will it last. “We are in a good trend, the economy is doing really well. If the anticipated job creation really happens, unemployment could fall to 7.5 or 8 per cent,” says Alain Trannoy, professor at Aix-Marseille School of Economics.

Some economists remain pessimistic about a possible further decline in unemployment. But others say there is enough life in the recovery to mean that further labour reform — or its absence — will not solely determine whether France joins the eurozone revival.

“There is something new in France, a certain new hope,” says David Beaurepaire, head of development and strategy at RegionsJob. “The election of Macron has boosted confidence for the entrepreneurs, recruiters and workers.”