French unemployment reaches historic highs
In France, 31.7% of the working population was affected by the lack of work in the second quarter - a historic average, driven up the lockdowns. Restoring confidence among nearly 10 million people will not be achieved in the remainder of the year
| 31.7% |
The share of the active population that was out of work in 2Q20Unemployment rate of 7.1% |
The unemployment rate of 7.1% is not a good measure of the situation
French unemployment figures released this week remind us of the precarious situation of the French labour market.
According to the International Labour Office, unemployment takes into account persons "aged 15 or over who meet the following three criteria: are unemployed for a given week; are available for work in the next two weeks, and have been actively looking for work in the last four weeks".
Lockdown measures due to Covid-19 have made meeting the last two criteria more difficult and many unemployed people who could have potentially benefitted from temporary unemployment schemes were unable to take advantage (especially those who could not go to work at all, without losing their job).
If we add underemployment to this, that is all those who were partially employed and had the willingness to work more, the figures are even higher. Together with the two million unemployed people, there were 2.5 million who could not be available or look for a job in the second quarter (since they had a job but could not work) and 5.3 million who were underemployed.
These 9.9 million people account for 31.7% of the active population in the second quarter, up by 4.3 million on the year. These figures should be considered as an average for the quarter, which explains why there are lower than the peak observed among beneficiaries of the temporary unemployment scheme (more than 12 million during the second quarter) put in place during the Covid-19 crisis.
Unemployed population (in thousands)
A return to normality will mean higher unemployment rates
While these figures are now a thing of the past, they provide a measure of the hiring efforts.
As lockdowns ease, French companies will have to restore confidence for millions of consumers. This will not happen entirely in the second half of the year and we continue to believe that as the demand shock is digested by companies, more workers will re-enter the unemployment statistic, which we expect to be at 10.5% at the beginning of 2021 (an increase of 3.4pp compared to 2Q20 levels), as corporates proceed to reorganisations.
If unemployment continues to worsen under ILO’s strict definition, it should not mask the fact that the situation will be improving for millions in the months to come.
Download
Download article"THINK Outside" is a collection of specially commissioned content from third-party sources, such as economic think-tanks and academic institutions, that ING deems reliable and from non-research departments within ING. ING Bank N.V. ("ING") uses these sources to expand the range of opinions you can find on the THINK website. Some of these sources are not the property of or managed by ING, and therefore ING cannot always guarantee the correctness, completeness, actuality and quality of such sources, nor the availability at any given time of the data and information provided, and ING cannot accept any liability in this respect, insofar as this is permissible pursuant to the applicable laws and regulations.
This publication does not necessarily reflect the ING house view. This publication has been prepared solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.
ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam).