France Beefs Up Job Support to Prevent a Lost Generation
Fallout from the pandemic has wreaked havoc on the labour market across the world making the young especially vulnerable.
(Bloomberg) -- France will beef up incentives for apprenticeships and support businesses that keep staff on payroll during a prolonged economic downturn to prevent losing a generation to long-term unemployment triggered by the coronavirus.
The move to support apprenticeships and make them available to more companies will cost around 1 billion euros ($1.1 billion), an official in President Emmanuel Macron’s office said. The government will also expand the financing of a system that allows struggling companies to furlough workers if they strike an agreement with unions to adjust working hours and conditions over the long-term.
“Sacrificing a generation of young people is out of the question -- we can’t allow it for the sake of young people, businesses and the country,” Labor Minister Muriel Penicaud said on RTL radio Friday.
While fallout from the pandemic has wreaked havoc on the labor market across the world, the young have been especially vulnerable. More than than one in six have stopped working since the onset of the crisis, according to the International Labour Organization.
The French program aims to draw on Germany’s experience in the 2008 crisis with its Kurzarbeit system, which helped avoid massive layoffs by allowing companies to adjust working hours to lower demand.
Penicaud said Macron is also ready to review his flagship reform of unemployment benefits given the difficult economic situation. The government will decide by the summer.
Joblessness surged in Europe’s second-largest economy after the financial crisis a decade ago. The country has recovered gradually, but failed to get unemployment back to pre-2008 levels before the coronavirus. Despite a sweeping furlough program expected to cost around 30 billion euros in 2020 to support around 12 million staffers, jobless claims have already spiked to a record high.
Young people are a particular concern, with the government estimating 15% of those in professional training have dropped out during the shutdown to contain the virus. In September, around 700,000 people exiting education will be looking for jobs at a time when the state expects a surge in bankruptcies as it withdraws emergency support.
Beyond the measures announced Thursday, the government is also weighing how to support young people in general as part of a recovery plan to be announced in the coming weeks.
“We are entering a longer, deeper crisis,” Penicaud said Thursday after a meeting with Macron, unions and business groups. “We need new tools to protect jobs and skills in the long term, to adjust production capacities in the context of a drop in demand.”
Doubling Down
European governments are doubling down on efforts to help their economies navigate the deepest recession in decades. Germany on Wednesday announced a sweeping 130 billion-euro ($147 billion) stimulus package.
The costs of France’s various fiscal efforts is already taking a heavy toll on public finances. Next week, the government will present a third emergency budget with an extra 13 billion euros of spending. The deficit is forecast to widen to 11.4% of output in 2020, with the debt ratio breaching 120%.
The budget will cover separate support plans for the automotive, aeronautical, tourism and technology industries that total around 40 billion euros in a combination of direct spending, loans and guarantees.
The measures for apprenticeships announced Thursday would open up the system to more companies and raise the incentive to as much as 8,000 euros per hire. The government did not say how much it would finance salary top-ups for furloughed workers in the long term, but the official said it would be a high level of support.
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