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Promoting employment, a key goal for the new French President

France has handed the presidency to François Hollande, the first Socialist to take the Elysee since 1995. Hollande, who campaigned on government stimulus programmes rather than on harsh austerity measures, is taking over a country with 10% unemployment. Interview with Raymond Torres, author of the recent ILO's World of Work, on French growth and employment strategy.

News | 07 May 2012
GENEVA (ILO News) – Moving out of the austerity trap and towards a growth and employment strategy will be crucial for France as it tries to tackle the jobs deficit that is particularly affecting the young, said Raymond Torres from the International Labour Organization (ILO).

“What’s important now is to stimulate job-rich growth, ensure a more progressive funding of social protection so that it weighs less on low-paid jobs, and adopt a special programme for tackling youth unemployment –presently more than twice as high as adult unemployment”, said Mr. Torres a day after François Hollande won the second round of voting in France. “That’s the best and quickest way of improving the employment outlook”.

France has more than 2.6 million jobless people according to the latest available unemployment statistics based on ILO standards. Around 22 per cent of French youth (aged 15-25) are unemployed.

According to Mr. Torres, head of the ILO’s International Institute for Labour Studies, France has the scope for tackling the job crisis while meeting fiscal goals: “France’s financial situation and competitiveness are better than in some of its neighbours. However, a major policy shift is called for as the country moves forward”.

“The first step is to come out of the austerity trap that has characterized policies in several European countries over the past two years or so”, said Mr. Torres. The recently-released ILO’s World of Work Report 2012 shows that such policies have been counterproductive as they have weakened growth and jobs while making it increasingly difficult to meet fiscal deficit targets.

“Likewise, EU member states should refrain from deregulating labour markets,” said Mr. Torres. “In the present crisis context, deregulation will aggravate job losses without promoting job creation. Of course, looking further ahead, badly-designed regulations should be reconsidered. Successful reforms as in Austria suggest that social dialogue is an effective instrument in this respect”, he added.

Mr. Torres said “the second step for France is to embark on a growth and employment strategy”, adding that “reinitiating the credit market for small enterprises, the main providers of job creation, is critical to achieve this goal”.

“One way of boosting credit is to strengthen guarantees for existing banks that lend to small firms, as in Germany”, he said. “Another option is to create a new credit institution which focuses on increasing investment in the real economy, notably in industrial sectors and services where the country has a comparative advantage”.

“Education also has a key role to play”, explained Mr. Torres. “France has one of the best high-education systems. However, many young people are unemployed. Instituting an “activation guarantee” as in Sweden could be considered. This way every young person who does not have a regular job would have an opportunity to go back to school, combine learning with work experience or get other support in return for job search”.

“France has to move quickly to stop the declining trend in real investment”, concluded Mr. Torres. “By adopting a socially responsible fiscal consolidation package and supplementing it with a growth and employment strategy, along with more progressive taxation, it will be possible to reduce both the job and fiscal deficits. An agreement with other EU leaders on these policies seems closer in reach now”.