Since the start of the Covid crisis, alarming economic indicators have followed one another on the state of employment. This Thursday, INSEE announces that in the first quarter of 2020 (January-March), the French economy destroyed 502,400 net jobs. This statistic is scary. But what does it correspond to?
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This means that the number of people employed at the end of March 2020 is 500,000 lower than the number of people employed at the end of December 2019. Over this period, there were (as usual) many hirings and end of contracts. This figure is the net result of these movements, says one to INSEE. " The net destruction of jobs gives us a real vision of the crisis insofar as they refer to net job losses due to the crisis and confinement, " said Christopher Dembik, economist at Saxo Bank.
Half a million jobs destroyed in three months " it's huge, " he adds. " These job losses in the first quarter of 2020 represent exactly the number of job losses in the five quarters that followed the subprime crisis in France in 2008/2009, " he adds. For the economist, this shows that it is a " very rapid " crisis .
Destruction mainly linked to the hiring freeze
Concretely, from mid-March the number of hires fell sharply due to confinement. A large number of people at the end of the temporary contract or fixed-term contract have not been renewed and those who should have been hired on a permanent contract in the last two weeks of March have not been. These job losses therefore come mainly from the hiring freeze, and not from a possible increase in layoffs, said INSEE.
Behind this figure, " many precarious workers, poorly qualified, with insecure jobs ", specifies Christopher Dembik. Many of whom are temporary workers. Temporary employment represents 40.4% of job destruction at the end of the first quarter, according to INSEE. " It is the most flexible contract and for businesses, the most flexible lever ," adds the economist. Young workers are also affected: according to a study by the International Labor Organization (ILO) published at the end of May, among those under 29 years of age, one young person interviewed in six has stopped working since the appearance of Covid-19.
10% unemployment by the end of the year
Mechanically, these job losses will increase the unemployment rate which also includes all new entrants to the labor market, access to which looks particularly complicated this year. Below 8% at the start of the year - 7.8% in the first quarter of 2020 according to INSEE, this rate risks once again exceeding the symbolic threshold of 10% this year, according to experts from the Banque de France. It would even climb to more than 11.5% in mid-2021, anticipates the institution. Before the start of the health crisis, the government's objective was to reduce it to 7% by the end of the five-year period. A goal that was then still " quite within reach " according to the Minister of the Economy, Bruno Le Maire.
“ Since the last crisis of 2008, it was difficult to lower the unemployment rate. We have had an enchanted parenthesis in recent years. We were not far from 7% unemployment, and for France it is rather a good performance. But a strong backtrack is expected, ”said Christopher Dembik.
Still millions of short-time workers
To limit the damage in terms of job destruction, the government used mass unemployment. From March 1 to May 25, 12.9 million people were covered by this system in France. In April, 8.6 million workers were partially unemployed, said the minister on Monday, who did not yet have the figures for May. The executive and the social partners are currently working on a new long-term partial unemployment scheme which should be in force for “ one to two years ” depending on the sector.
If there are no economic improvements, there will be massive layoffs in September
Christopher Dembik“The challenge now is to see how and what devices will be put in place to extend this safety mattress, underlines Christopher Dembik . Because by September, if there are no economic improvements, there will be massive layoffs at the start of the school year, especially in sectors less affected so far, predicts the economist . If there is a second wave, a second screed, they will not hesitate to cut costs. And then we will risk worse than in 2008. "