The unemployment rate in France surged in August (the latest report) to a 12-month high of 10.5%. French President Francois Hollande said he will not run for reelection unless the rate drops below 10%. Will he keep his word?
The Financial Times reports French Unemployment at 12-Month High.
France is bucking the trend among the major economies in the eurozone, with its closely-watched unemployment rate hitting a 12-month high in August.
Europe’s second largest economy is sticking out like un sore thumb, with almost every other country in the 28 member EU trimming or holding its jobless rate.
France’s jobless rate inched up to 10.5 per cent this month according to figures from Eurostat. That’s risen steadily from 9.9 per cent in May and defied the broader eurozone-wide trend where unemployment is hugging five-year lows at 10.1 per cent.
French unemployment has become a lightning rod in the country’s political debate after incumbent president, Francois Hollande, has vowed to only stand for re-election next year if the rate falls into single figures.
The International Monetary Fund has warned France’s “structural unemployment” is set to remain elevated as the country is hampered by burdensome regulations and high tax levels.
Currently led by a former French finance minister, Christine Lagarde, the IMF has called on France to reform its minimum wage structure and boost private sector job creation through ambitious labour market reforms.
On rare occasions, make that extremely rare occasions, Christine Lagarde actually says something that makes sense. This is one of those times.
France’s wage structure, hiring and firing rules, tax structure, work hour rules, etc., etc. are all horrendous.
But at the first hint of badly needed reforms in France, what typically happens is the unions, the socialists, and the farmers dump “merde” all over the place, shutting the country down.
Then the reformers back down, and the only thing remaining is merde.
So “Will Hollande keep his word or will he humiliate himself?”. Actually close to 90% of the country thinks Hollande is a fool. He has already humiliated himself.
Will Hollande humiliate himself even more?
We do not know for certain, but that’s what fools typically do.
Mike “Mish” Shedlock
His own party does not want him to run so this might be a great way for him to pull out of the race and for the socialist party to introduce a more popular candidate. Both the right and the left know that if Hollande runs there is a 100% chance of FN’s Marine Le Pen beating him and making it to the second round where she might win the presidency. Just like in the US the socialists and republicains are a different side of a same coin. Their only goal is to stay in power and for this they know they need to prevent the FN candidate from being present at the second round at any cost.
If they do liberalise employment laws the first response could be an increase in unemployment as it opens the doors to increased efficiency by trimming headcounts which is currently costly.
There’s no painless way back to increased employment and with the British on the way out trade volumes are bound to suffer. It’s only going to get worse this side of the Atlantic. One of the future actions of the British will be to exit the CAP (Common Agricultural Policy) and that will hit French farmers as it was always a protectionist policy to help the French.
The EU itself is looking to increase inward investment in Poland/Slovakia/Romania/Czech Rep and Hungary to help development and reduce the pressure to migrate West for jobs and anyone with a big factory to set-up to service the EU will look to go there – not France.
Anti EU sentiment is rising in France and the leadership is seen as lame duck.
Hollande and Renzi are both very verbal but don’t appear to achieve much. This is also a cost of being in the EU when leaders have little extra control so are really just seat warmers. The changes needed will butt up against EU regulations and then the country has to back down or face the consequences.
Sarkozy has floated the idea of a Treaty renegotiation but was slapped down. Like the British, France will have to take its medicine as the British exit progresses and budgets tighten and trade volumes reduce due to introduction of tariffs.
All the while the Germans smile as they are benefited by a weakened Euro and run a surplus in exports in a very controlling fashion. Nothing changes over there unless it gets the green light from Germany. France = poodle.
Whilst it is inevitable that the UK leaving the EU will then automatically mean it exits the Common Agricultural Policy, that of itself will not affect the policy nor is it at all clear that an outcome of UK exit will mean lower volumes of trade in France (or the UK).
The EU emphasizes its single market characterictics and therefore does not allow and cannot itself promote inducements to foreign investors to locate in one particular country or group of them as against locating elsewhere within the EU. France recently was in discussions with Tesla about attracting that company’s manufacturing to France, suggesting that international investors are minded to consider France still.
Try telling that to Schauble and Junker/Tusk. Schauble has been clear about investment in the East and the need to attract more and then look at the recent meeting in Japan with Abe.
The move out by the UK will increase access to the UK market by East African producers of agricultural products as just one example. They walked out on a deal with the EU as the terms were too onerous and not advantageous. There are other developing countries very willing to displace European suppliers into the UK market. UK imports 50% of its food.
This is just one example.
There will be tariffs introduced on the UK exporting on to the EU (reciprocal) and that will suppress trade volumes, it always does especially as the UK imports more than exports.
I would take lower trade volumes and agricultural commodity prices to the bank. Neither good for France. Germany needn’t worry about the agricultural end and can weather the industrial.
Spain will feel it too along with Netherlands and Italy. Best to be a manufacturer of high end foodstuffs with a DOC – Parmesan etc.
That France resists Christine Lagarde’s reforms for corporate fascism is a good thing, just because it is a socialist country, you unfairly mock it because it doesn’t conform to your neoliberal bias. The 10.5 % unemployment figure is probably less in real terms than both the US and UK, both of whom (as you well know) manipulate their figures to look better than they actually are. At least France is accurate regarding it’s unemployment, given that the majority of its workers are covered under the scheme and unlike America, it doesn’t leave tens of millions of unemployed out of the equation. Stick to reporting the salient facts Mish, you don’t do yourself any favors when you allow your politics to cloud the issue, I have lived in both societies and I know which one I prefer.
I have lived in both societies and I know which one I prefer.
Obviously you like free handouts at the expense of those who work.
Everyone who doesn’t work or needs handouts feels the same way.
The German deflationary influence is crushing Southern Europe to force creation of a super state as the South will ultimately beg to hand over their budget control to a central finance ministry. France is joining that gang.
It’s the only way for the Euro to survive and will be made to happen no matter what the human cost. Resistance is futile.
They will then have central law (ECJ), central monetary/budgetary control, EU army, Flag etc.
The constituent countries will cease to be sovereign (if they haven’t already) and people may as well not bother to vote in national elections. It will make no difference as all controls will be outside of the borders of the country.
Had Britain voted to stay it would have accelerated and finally Britain would join the Euro. The vote upset many big plans and some of the elite have not given up on achieving their aims and will look to punish the British no matter what they say publicly.
No escapee must be seen to prosper so every attempt will be made to hinder that potential prosperity.
Never ever ever ever EVER trust a man who’s eyes are too close together. EVER!!!!
who would that be Roger?
Stuki Moi said:
I’d say you got that one completely backwards, but to each his own…….
In general (very general….), lots of cranial real estate outside of the eyes (eyes close together), are a sign of masculine brain traits. As in, increased propensity to sticking to what you’ve decided to do, come what may; rather than situationally rationalizing backing away from it. So hence, trustworthy. Of course, with that comes generally lessened situational empathy, as in Aspergers, autism etc.
France is like Illinois. They are in an alternate reality where the rules that apply to other EU countries or states don’t apply. Trying to figure out what is going to happen next with either of them is futile. The paradigm shift required to guess is just too great.
barry b said:
This is what the US will look like with the Demos in charge………….
The French government will change the way they calculate the unempolyment rate and, Shazam!!!, the reported rate will be below 10%. Problem solved.
Do they count you “employed” if you cut a lawn for $10 in the past week like the US… prolly not, and he should give Obama a call… 1/2% is a slam dunk… or a 2 ft putt!
Yes you are counted as employed if you cut a lawn for $10
Le Code de Travail: 4000 pages! End of discussion!
Chris Wagner said:
Please turn off the “Tabs locked” key, making your comment easier to read… Merci.
I hear Elba is nice this time of year.
Jon Cloke said:
Yeah, bloody socialists, eh? Just think, if the French didn’t have a socialist in charge they could have a million people dependent on food banks, like the UK! What they need is that nice Mr Cameron to go over there and show them how to massage their unemployment figures like the UK does, by setting target figures for JobcentrePlus workers for disqualifying unemployed people from benefits.
But Hollande is learning some things from the UK; he quickly started an external war by bombing Syria once he’d tanked the economy, and France is busy selling weapons to any dictatorship that wants them to commit atrocities with, all in the name of the “War On Terror PLC” – the priapic dwarf must have been so relieved when the bombing came back to France so he could relieve the French of all their civil liberties and restrict their protests against him!
Still, that’s what happens when you have socialism, isn’t it? Apart of course from when you have the kind of socialism that rescued the banks in 2008 and turned global financial services into a taxpayer-funded, nationalised industry. O, and saved all of Mish’s investments.
That kind of socialism is fine, isn’t it Mish?
Well Jon, if you bothered reading anything I have ever written about the bailouts, you woould look in a mirror and say “Damn, that’s sure one of the stupidest things I have ever said.” OK maybe not, socialists have a tendency to say remarkably stupid things, so perhaps it would not make the list.
No blogger protested those bank bailouts more than I did. I organized a Congressional phone-in campaign against them. And by the way, those bailouts were not socialism, so perhaps you do not even know what the term means.