Daily Management Review

Hollande Declares War On Unemployment


French President Francois Hollande has unveiled measures to combat unemployment, saying that the economy entered "a state of emergency." These measures include establishment of retraining programs for unemployed and providing additional subsidies to small businesses.

"We have to make sure that growth became more sustainable to create more jobs. Our country has too long been experiencing difficulties with structural unemployment, and it is in need of reform," - said Hollande.

The plan to combat unemployment stipulates that enterprises with staff of less than 250 employees will receive 2 thousand euro to recruit young professionals for a period of more than six months and pay them a salary of $ 1 to 1.3 of minimum interprofessional wage (SMIC). The measure will be valid for two years from today, said the French President.

In addition, 500 thousand unemployed, whose specialty was not claimed, will have an opportunity to undergo retraining. In total, the plan’s implementation will require about 2 billion euros.

However, according to some analysts, measures to combat unemployment will not lead to the expected result and are necessary mainly to improve Hollande’s ranking ahead of the presidential elections in 2017.

"The new measures are prepared according to old recipes. Professional training programs are controlled by unions, and attempts to stimulate the internship programs have not been producing results in the last few years. As always, ahead of the presidential election, we are entering a phase of public spending growth," - said Head of the Institute for Research in Economic and Fiscal Issues Nicolas Lecaussin. Francois Hollande, however, said that the cost of adopted plan’s implementation is offset by a reduction of social benefits for the unemployed residents of France.

Since 2012, when Hollande became president of France, number of unemployed in the country increased by 600 thousand, while most other European countries have experienced a decline in unemployment.

Two years ago, Hollande had already taken measures to combat unemployment, which included provision of tax incentives for business in the amount of 40 billion euros over three years. This step was intended to encourage temporary employment and thus reduce the budget spending on unemployment benefits.

Despite these measures, the unemployment rate in France is more than 10%, while the average unemployment rate in the EU - 9.8%. As of November 2015 in the UK, unemployment is 5.2%, Germany - 4.2%.

After three years of stagnation, the French economy in the past year has moved to increase, which exceeded 1%. Nevertheless, pace of recovery of the euro zone’s second largest economy is not sufficient to employ all graduates as firms remain reluctant to hire new employees.

source: ft.com