France’s economy looks to be on the up recently, following growth in several areas over the first two quarters of 2017. Developments in the country’s employment rates, as President Macron makes steps towards reformation, may also lead towards positive growth for the country.
The second largest economy in the Eurozone, France experienced economic growth of 1.9% in the second quarter, following the upward trend that was observed in the previous two quarters. One driver of this upward growth is a high level of foreign demand for French exports. Export levels increased by 10% in the second quarter of 2017, the highest level in four years, following a rise of only 3.4% in the first quarter. The increase in exports was nearly seven times higher than that of imports, which rose by 1.5% in the second quarter. Although also up by 2.7% in the second quarter, gross fixed capital investment growth was down on the first quarter when it hit 5.4%, its highest level since 2011.
Progress is also being made in France’s labor market. President Macron has put measures in place in the hope of tackling the country’s growing unemployment issues. In a move to make it easier for companies to negotiate agreements in-house concerning employee wages and working conditions the labor reforms will limit the power of unions to a certain degree. Further efforts have been announced to encourage companies to offer more permanent contracts than they currently do with caps being placed on the payments that can be imposed during tribunals over unfair dismissals. Previously tribunals were able to set high rates of payments in unfair dismissals claims and the hope is, with these rates capped, fewer companies will offer temporary contracts to employees. In another attempt to raise employment levels the government intents to make changes to the unemployment benefits system and reduce payroll taxes. These steps, although controversial, should stimulate higher employment.
As Macron’s policies are put into place it awaits to be seen how they will affect the employment sector. The outlook is generally positive with levels of unemployment falling, however, unions currently still hold a high level of power, working with employers to set national wage rates. The result is that, for many companies, the wages they pay their employees are out of line with productivity levels. Overall, the country appears to be in a period of upheaval, with upward economic growth over the past three quarters and positive developments within France’s employment sector.