Posted Nov 21, 2022, 6:11 PM
The government is not alone in thinking that job creations are possible in 2023, despite the sharp economic slowdown that is looming. The IMF shares this conviction, unlike most French economists who anticipate a downturn in the labor market. The institution’s forecasts, however, reflect a more moderate optimism than that of the executive, which is betting on 115,000 creations in 2023.
“We are counting on job creation, but few in number, which should allow the unemployment rate to stay around 7.5% next year,” said Jeffrey Franks, deputy director of the IMF’s European department. It is true that the Fund and the Borne government have another point in common: they are both betting on a little growth in 2023, the first anticipating a rise in GDP of 0.7%, the second of 1%.
Improve potential growth
Furthermore, Jeffrey Franks recognizes that “thanks to the reforms undertaken, in particular those relating to apprenticeship, the labor market is functioning better than before”. “As a result, the working population is larger today than before Covid-19 and the unemployment rate is at a historically low level. The counterpart was a drop in productivity, as in many countries,” he adds.
After these positive messages, the institution considers it necessary to go further: “This is what will increase the potential growth of the French economy, with the rise in productivity”, assures the expert. At this stage, the IMF estimates that it should stand at 1.3% in the medium term. To do better, France will have to tackle the persistent weaknesses in the labor market. And “there is still a lot to do,” says Jeffrey Franks.
“Participation rates remain lower than in many comparable countries,” notes the IMF. To remedy this, efforts aimed at low-skilled workers and young people must be strengthened. “A young person must either work or be in training, but not unemployed”, supports Jeffrey Franks.
The Fund pleads for the strengthening of training programs and the improvement of their quality, seeing in this a solution to the problem of the inadequacy of the workforce to the needs of companies. It also recommends apprenticeship follow-up “to ensure the transition of apprentices to permanent employment”.
Low level of education
The institution welcomes the reforms undertaken or announced, whether it be that of unemployment insurance which has just been presented, or that of pensions which will aim to keep seniors in employment longer. And advises adding devices that will promote professional and geographical mobility to reduce structural unemployment.
However, the IMF’s reading is that we must go well beyond this and attack the roots of the problems. The international organization thus insists on the need to improve the level of education of French students, currently “relatively low compared to that of their peers” despite high expenditure. A huge construction site.
The organization provides some avenues for moving forward. These include greater autonomy for school administrations as well as improved teacher training and the introduction of “performance-based pay”.