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FRANCEAuthor

Bruno CoquetLabour Market Measures

in France 2008-13:

The Crisis and Beyond

2

FRANCE

Copyright © International Labour Organization 2015

First published 2015

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Coquet, Bruno

Labour market measures in France 2008-13 : the crisis and beyond / Bruno Coquet; International Labour O?ce, Research Department. - Geneva: ILO, 2015 ISBN

978-92-2-129762-8 (web pdf)

International Labour O?ce Research Dept.

labour market policy / employment security / unemployment bene?t / promotion of employment / wages / employment policy / trend / France

13.01.2

Also available for Germany ISBN 978-92-2-129770-3 (web pdf); Greece ISBN 978-92-2-129766-6 (web pdf);

Ireland ISBN 978-92-2-129768-0 (web pdf); Italy ISBN 978-92-2-129772-7 (web pdf); Latvia ISBN 978-92-2-129774-1 (web pdf); Netherlands ISBN 978-92-2129782-6 (web pdf); Poland ISBN 978-92-2-129776-5 (web pdf); Spain ISBN 978-92-2-129778-9 (web pdf); Sweden ISBN 978-92-2-129780-2 (web pdf); United Kingdom ISBN 978-92-2-129760-4 (web pdf). A synthesis report of the above monographs entitled Inventory of labour market policy measures in the EU 2008-13:

?e crisis and beyond is also available. ISBN 978-92-2-130246-9 (print pdf); ISBN 978-92-2-130247-6 (web pdf)

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3

Contents FRANCE

Contents

1.

Introduction

5 1.1

The macroeconomic impact of the crisis 5

1.2

Main labour market developments 11

2. Contractual arrangements

and Employment Protection Legislation (EPL) 15 2.1

The context 15

2.1.1

Change in OECD-EPL indicator 18

2.1.2

Labour contracts 20

2.1.3

Working time and Sunday rest 22

2.1.4 Contract termination 25

3. Wages 28

3.1 Wage-setting institutions 28

3.2 Trends before the crisis 28

3.2.1 Structural trends: Wages, labour productivity, wage di?erential 28 3.2.2 Wage dynamics in?uenced by working time and labour cost policies 29 3.2.3 Minimum wage and wage bargaining at branch level 29 3.3

The impact of the crisis on wages 33

3.3.1 Puzzling trends 33

3.3.2

Composition e?ects 34

3.3.3

Wage setting 36

3.3.4 Wage and revenue di?erential 38

4. Unemployment insurance 41

4.1 Unemployment Insurance in France 41

4.1.1 Organization 41

4.1.2 Coverage and recipients' characteristics 41

4.2 Conventional views of the French UI system 44

4.3 Debate and negotiations during the decade before the crisis 45 4.3.1

From 2001 to 2008 45

4.3.2

Changes between 2009 and 2013 45

4.4 Structural challenges are still greater than di?culties due to the crisis 49

4.4.1

Not only one UI system, but four 49

4

Contents FRANCE

4.4.2

Current labour market conditions and use of UI 51

4.4.3 Bene?ts "generosity": the replacement rate 51

4.4.4

Other aspects of bene?ts "generosity" 52

4.5 The 2014 round of negotiations 55

4.5.1 Context and stakeholders' goals 55

4.5.2

Reforms enacted 55

5.

Active labour market policies (ALMPs) 57

5.1 General background 57

5.2

From unspeci?c policies to programmes

focused on vulnerable groups 58 5.2.1

The golden age of subsidized public jobs 60

5.2.2

Refocusing subsidies to enhance e?ciency 61

5.2.3

Phasing out subsidized jobs 61

5.2.4

Fewer and simpler tools to improve e?ciency 62

5.2.5 From structural reforms to counter-cyclical policies 63

5.3 Public Employment Service 65

5.3.1 Ten years of the Public Employment Service: From birth to reform 65 5.3.2

Assistance to Jobseekers and monitoring 68

5.3.3

Obligations and sanctions for UI recipients 70

5.3.4

PES, services to employers 71

5.4 Lifelong learning 71

5.4.1

A complex organization delivering poor results 71

5.4.2

Reforming is di?cult and slow 72

5.4.3

Public policy initiatives to ?ght the crisis 76

Conclusion 78

Bibliography 79

Glossary 84

Chronology of labour market reforms (2002-14) 86

5

1. Introduction FRANCE

1.1

The macroeconomic impact

of the crisis Since 2008 the French economy has been hit hard, ?rst by the global recession and later by the unfolding in stability in the Eurozone. While having been hit sooner than most of the Eurozone, France was more e?cient in lim- iting the output decline in 2010, and again in 2012 and

2013. On average, GDP declined slightly more in the rest

of the Eurozone than in France, where output caught up with its pre-crisis level in 2013 (?gures 1 and 2). In 2009, output suddenly stalled in France as well as in most European countries, but companies reduced employment more slowly than during previous reces- sions (?gure

6). Despite more than 360,000 jobs being

destroyed by the end of 2009, France experienced un- precedented job retention, in particular in the industrial sector, where companies maintained output capacity well above needs (see ?gure

6 in Heyer et al., 2013).

?is did not prevent an impressive rise in unemployment: between 2008 and 2009 the unemployment rate grew from its lowest level since the early 1980s to its highest level since the late 1990s. A?er stabilizing for a while, from 2011 a second wave of the crisis sent the unemployment rate up to 10.4 per cent in 2013, near its post-war record (10.8 per cent in 1997). While 1 Bruno Coquet is a Research Fellow of the Observatoire Français des Conjonctures Economiques (OFCE), and a Policy Fellow of the

Institute for the Study of Labor (IZA).

smoothing again in 2013, unemployment is still on a rising trend. In absolute terms, the population of the un- employed reached its highest levels ever: 5.8 million un- employed were registered with the Public Employment

Service, among which 5.1

million were "actively searching a job" in September 2014 (Dares,

2014b).

As regards the impact of the economic crisis on both economic activity and the labour market, France has had a median record since 2007 (?gures 3-6). France's policy management during the crisis is widely recog- nized for its e?ciency in cushioning the main e?ects of the crisis, both on output and the labour market. Indeed, France bene?ted from powerful automatic sta- bilizers (in particular Unemployment Insurance and poverty allowances, RSA). As a consequence, France experienced only a moderate decline in output despite negative ?scal impulses of the same magnitude as those of other big Eurozone members such as Italy (table 1). Since 2010, ?scal austerity has been tighter in France than in the rest of the Eurozone, leading to weaker output growth but no distinctive e?ects on both labour market performance and public ?nances. Positive outcomes as regards crisis management and the capacity of economic institutions to shield French com- panies and people from the worst e?ects of the business 1

Introduction

1

Table 1.

Fiscal stimulus in seven big OECD countries, 2008-13

2008-0920102011201220132010-132008-13

Germany0.71.4-1.2-1.00.0-0.8-0.1

France2.6-0.5-1.8-1.1-1.2-4.6-2.0

Italy0.4-0.9-0.2-2.7-0.4-4.2-3.8

Spain4.4-1.4-1.0-3.7-1.6-7.7-3.3

United Kingdom3.4-2.7-3.2-0.5-1.0-7.4-4.0

USA6.8-0.8-1.3-1.4-1.5-5.01.8

Japan3.90.50.50.50.62.16.0

Source: Heyer & al. (2013).

6

1. Introduction FRANCE

cycle temporarily overshadowed France's structural weaknesses. ?is is surprising, since numerous and deep reforms were passed during the last decade, including a?er the beginning of the crisis, but the pace of reform was too slow and their substance insu?cient to meet needs.quotesdbs_dbs32.pdfusesText_38

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