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Macro Economics: The Growing Unemployment in France - Essay Example

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Over the years, the labour market performance in France has been regarded as unsatisfactory. The first oil shock and the beginning of recession in 1974 marked a continuous rise in the employment rate of France…
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Macro Economics: The Growing Unemployment in France
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Download file to see previous pages There was however a gradual decline to 8.8% in 1990, but the trend assumed its ascent after this. It is believed that labour supply and demand factors contributed to the rise of unemployment. This is because the France labour force grew by approximately 16% between 1970 and 1992, which was concurrent with an increase in the population of the working age. Masson (1995, p.7) states that “During the same period, employment growth has been disappointing: there was no net increase in employment between the mid-1970s and the late 1980s.” Between 1973 and 1987, male employment dropped; employment in ordinarily male dominated industrial sectors such as chemicals, metals and mining also declined. There has been a renewed rise in unemployment in all OECD member countries, as well as all the other major seven, since the end of 1990. France also suffers from notably severe problems of long-term, female and youth unemployment. According to Girling (1998, p.162), “in June 1997, there were some three million unemployed; more than one third were ‘long-term’, that is, unemployed for more than one year.”Over half of those seeking employment were women as the less educated constituted the great majority of job seekers. France’s relatively poor performance on the unemployment front has been attributed to its demographic situation. The Organisation for Economic Cooperation and Development (1992, p. 61) points out that “France’s experience in terms of total population growth stands out: while others faced a slowdown, France’s was better maintained, given its higher birth rate.” It was until the mid-1980s that the rise in the working-age share of the total population in France got noticed. According to Waters (2003) employment in France by 1998 had risen to 11.8% above average for the EU. Despite the fact that young people suffer less from long term unemployment than their elders, they have difficulty entering the labour market. According to the Organisation for Economic Cooperation and Development (2009, p.51), “In 2007, only one unemployed youth out of four was still jobless twelve months later compared with two out of five unemployed in the 25-49 age group.” However, in current years France, like Germany, has witnessed the rate of unemployment rise for unemployed young people as well. In recent years, there has been a high rise in unemployment. According to the Organisation for Economic Cooperation and Development(2009, p.1) “Since the end of 2007, the unemployment rate has risen by 2 percentage points to reach 9.8% in July 2009, and more than 600 thousands individuals have joined the ranks of the unemployed”. On the other hand, the average unemployment rate of the OECD in 2009 had risen by 2.8%, and in July the same year, it stood at 8.5%. In 2009, unemployment in France continued to rise, and it was expected to exceed 10% in 2010. According to reports (france24.com, 2009) “After industrial output dropped off in France in early 2009, the Paris-based French Economic Observatory,OFCE forecast that the country's economy would shrink by 2.3 percent this year and that unemployment would top 10 percent in 2010.” The following table shows the unemployment rate of France in terms of the percentage of the labour force: France unemployment rate between 2008 and 2012, cited in Trading Economics, 2012. The rise of unemployment in France has been attributed to several factors namely; Employers’ Taxes: Social security contributions, especially for employers are very high in France. Masson (1995, p.16) points out that “The total employee and employer contributions as a ratio to income are ...Download file to see next pages Read More
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