France: labor market paradoxes

Unemployment in France is the smallest in a quarter of a century. According to the National Institute of Statistics Insey, in the fourth quarter of 2007, unemployment in the second largest economy of the euro area dropped to 7.5% of the working population of France, a record low since 1983. Given the overseas territories, unemployment is slightly higher – 7.8%. Official data show a smooth decline in unemployment, but analysts say the paradox.

“In the 4th quarter, the number of job seekers fell by more than 100 thousand, these are huge numbers,” says economist Mark Tuati. “But at the same time, employment grew by only 60 thousand people. There is a clear discrepancy between the decline in unemployment and the increase in the number of jobs.”

Explanations by experts of this statistical paradox are unpleasant for the French government. Inconsistencies may mean, firstly, the influx of labor into the black market of labor. The second possible reason is an aging population: workers are retiring and are not being replaced by anyone. Finally, due to harsh labor laws and high taxes, the shift practice is spreading in France: companies import foreign employees to perform specific work, and after the short-term temporary contract expires they are sent home.

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