Jobless rate drops but numbers don’t add up

PARIS, Jan 31, 2006 (AFP) – The number of people unemployed in France fell sharply in December, and by 5.2 percent in the whole of 2005 cutting the unemployment rate from 10 percent to 9.5 percent, official data showed on Tuesday.

In December alone, the number of people unemployed fell by 19,300, a reduction of 0.8 percent from the December figure and, more remarkable, for the ninth month in a row.

In the whole of 2005, the number of people available for work but unemployed, fell by 126,800. Nevertheless, 2.31 million people were registered as unemployed.

For the centre-right government, facing elections next year, the figures justify measures it took after electoral setbacks mid-term to relax tight job-protection legislation.

Although this sharp fall is widely welcomed, analysts are perplexed and opposition forces are sceptical. The opposition opposes the measures, saying they open the way for deeper cuts in the extensive framework of job-protection legislation.

For about 25 years French unemployment has risen persistently, albeit it with ups and downs as cyclical unemployment responded to upturns and downturns in economic activity.

The underlying figure, known broadly as “structural unemployment”, rose despite various policies and programmes to stimulate economic activity or to help the unemployed, and particularly young, unqualified people, to find work. There were also schemes to encourage early retirement which have now been largely reversed.

Unemployment, and a wide range of associated social and economic problems, have been a central issue in election after election.

Cyclical unemployment is a theoretical estimate of the unemployment that is related closely to the growth cycle of market economies.

Structural unemployment covers an estimate of the unemployment that is unaffected by economic recovery because factors interfering with the matching of skills and jobs on the labour market.

Early last year, the government took the highly controversial route of relaxing complex legislation to protect people in work.

The aim was to encourage small businesses to employ people temporarily without being bound to employ them permanently, and to help the young unemployed to find work for up to two years.

At the beginning of 2005, the number of people registered as unemployed had risen to 10.2 percent in March. The trend changed modestly in April and then decisively.

Analysts are perplexed, in part because the fall in unemployment is not matched by a rise in the number of jobs being created.

The government explains this by saying that the official INSEE statistics office has difficulty in measuring employment in small companies.

The measures also encouraged the provision of personal services, for example to people in their homes, and the social cohesion ministry says that this has resulted in the creation of 80,000 jobs.

But opposition Socialist parties and the trades unions say that the fall in unemployment reflects mainly the beginning of a wave of retirement affecting people born immediately after World War II.

Another factor, they say, is that the government has tightened controls on people entitled to unemployment payments and that this has probably increased the number of people considered ineligible to be registered as unemployed.

The national employment office ANPE has countered that the number of people cut from the unemployment register was about the same in 2005 as in 2004.

Copyright AFP

Subject: French news