The French economy is not only full of bad surprises. Unlike the country’s budget situation, which is described as “very serious” According to the new Prime Minister, Michel Barnier, hourly productivity, weakened by the Covid-19 pandemic, seems to show some signs of recovery.
In twelve months, between the second quarter of 2023 and the second quarter of 2024, this figure, which measures the added value produced based on the number of hours worked, increased by 1.3%, says Eric Heyer, director of analysis and forecasting at the French Observatory of Economic Conditions. “much higher rate than before the crisis”In the years before the health crisis, productivity grew by around 0.9% annually.
The crisis linked to the pandemic, with closures and other disruptions to industrial production, and then supply disruptions linked to the war in Ukraine led to a drop in production. But at the same time, the labour market, supported by partial unemployment, aid to businesses and the fact that companies are retaining their workforce while waiting for the end of the crisis, has allowed to support job creation. Apprenticeships, for their part, continued to expand.
Inexplicable
Between the end of 2019 and the second quarter of 2024, the national economy gained 1.1 million jobs. Much more than we would have gained if productivity had remained the same as before the crisis: the economy should have gained “only” 129,000 additional jobs. In other words, Heyer sums up, 980,000 jobs are “too many” compared to the country’s growth.
When Covid-19 emerged, the results were worrying: economists estimated productivity losses at around 5% over the period from mid-2019 to mid-2023. Part of this decline can be explained by job “retention”, apprenticeships and reduced working hours, but another part is inexplicable, according to economists. It corresponded to 480,000 job creations.
However, this figure has been revised downwards: “According to the national accounts published in May, the gross domestic product was slightly higher than the initial estimate by INSEE and job creation was much lower”explains Matthieu Lemoine, economist at the Banque de France. “Overall, productivity deteriorated less during this period than we thought.”
The “inexplicable” part only represents 285,000 jobs, concentrated in two sectors, industry, with about 200,000 jobs, and construction. This situation should be temporary: “When the activity distributes these branches, these companies will use this available workforce and will not have to hire”explains Eric Heyer. And this “surplus” of jobs will then be absorbed.
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