Growth at half mast: how is employment reacting?

► How to explain the fall in unemployment in recent months despite the decline in growth?

For many economists, this is squaring the circle. While economic activity is running out of steam (+0.2% in the third quarter of 2022), the labor market continues to hold up and has even seen the level of unemployment slowly decrease over the past six months. For Denis Ferrand, director general of the institute of economic studies Rexecode, several phenomena make it possible to explain this somewhat unusual situation in the economic landscape.

The first element of the answer lies in the retention of labor orchestrated by companies, even those faced with a decline in activity. Recruitment difficulties and labor shortages scare employers away”, argues the economist. “They therefore kept the job », as a precaution.

Moreover, some have even had to hire: 90,000 positions thus opened in the third quarter of 2022 in the private sector in France. This phenomenon mainly affects labour-intensive activities, ie the tertiary sector (catering, tourism, trade, etc.), which is less affected by the rise in energy costs than industrial activities.

According to the economist, the maintenance of employment is also explained by the absence of pressure in terms of liquidity: So far, companies have been able to maintain a fairly high level of expenses because their cash flow was not threatened », continues Denis Ferrand. It is this situation that is changing, economic performance not being evident in the coming months”.

Another significant explanatory element would be the intensive development of apprenticeships this year, with 800,000 work-study students counted in September 2022. One third of net job creations would be attributed to this asset category », recalls the economist.

► Will it last?

For now, the future remains unclear. But the indicators suggest that the situation is more likely to deteriorate than to persist. Hit by the war in Ukraine and rising inflation, France saw its economic activity slow down throughout 2022, and 2023 will certainly suffer the consequences. The Banque de France thus anticipates growth of 0.3% without ruling out the possibility of a recession, which would however “temporary and limited”.

In fact, employment is likely to suffer from this situation. With the rise in energy costs, wages – in particular the minimum wage – and the drop in productivity, companies are gradually seeing their margins eroded, which could lead them to disadvantage employment, or even lay off.

► Should we fear waves of layoffs?

At present, the risk remains low. “Employment is a lagged variable: the economic cycle must first be reversed for there to be a reaction on the part of companies”, emphasizes Denis Ferrand. But the difficulties will become stronger and stronger, nuances the economist, adding that we are already observing a “slowdown in hiring flows”.

Some emblematic cases are already punctuating the news. This is particularly the case of Camaïeu or Place du Marché (formerly Toupargel), both placed in compulsory liquidation in September 2022 and January 2023, and resulting in the elimination of 2,600 and 1,900 salaried jobs. The Go Sport chain of stores was placed in receivership by the Grenoble commercial court last Thursday.

“Some companies will find themselves unable to pay their employees. There will be failures. And layoffs, forecast Denis Ferrand. But for the economist, the impact of these job losses could be mitigated thanks to the plasticity of the current labor market, which is experiencing very high job mobility: “The challenge will be to quickly reallocate people who have lost their jobs to a new position. »


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