Why France Has Both High Joblessness and Jobs to Spare
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The skills gap threatens to boost unemployment and hurt the productivity of France’s industries.
In a factory near the town of Cholet, some 50 kilometers from Nantes in the west of France, large blocks of clay are being shaped, dried out and fired in a kiln at 1,000 degrees Celsius. These terra-cotta building blocks are then shipped off to construction companies.
The factory’s owner, Bouyer Leroux, is the leading French manufacturer of terra-cotta building materials, and stands to benefit from the country’s tentative economic revival. However, there is one key dynamic that could put a brake on growth, despite a recovering economy and France’s reform-minded government: difficulties in recruiting.
“The current situation for hiring both skilled and unskilled workers is difficult because there’s an imbalance between supply and demand,” says Bouyer Leroux’s CEO Roland Besnard, wearing a hard hat and a high-visibility vest over his navy-blue suit.
Even in France, where unemployment is stuck at more than 9 percent and among the highest in Europe, an increasing number of companies are complaining about the lack of skilled workers, according to Insee, the country’s national statistical institute. This mismatch between companies’ needs and the skills available — a phenomenon in large parts of the eurozone — could crimp the region’s nascent economic recovery.
On the one hand there is high unemployment, but on the other hand, a large number of midsize companies say that their main difficulty is hiring.
Nicolas Bouzou, head of Asterès, an economic research center
This summer Bouyer Leroux, which employs 1,400 people in France and is increasing revenues at a rate of 10 percent a year, had to increase its delivery time because of a dearth of maintenance workers for its production sites. “Maintenance activities are not skewed to one industry, so there is a competition for maintenance workers between industries because of the slight recovery,” says Besnard.
He echoes the sentiments expressed by many CEOs who are struggling to hire skilled and unskilled workers in France when he says, “The main concern is the university system, the school system and a welfare system that’s too generous.”
It’s a concern shared by policymakers. France’s Finance Minister Bruno Le Maire told a group of journalists last month that the questions of skills is “the most important economic issue in France” today. He said: “We have a system of learning that does not provide the skills that are needed. And suddenly, you have falling unemployment.”
According to a report in July by the Bpifrance public investment bank, nine out of 10 midsize companies are facing recruitment difficulties.
“There is a paradoxical situation in the French labor market where on the one hand there is high unemployment, but on the other hand, a large number of midsize companies say that their main difficulty is hiring,” says Nicolas Bouzou, head of Asterès, an economic research center.
Bouzou says this is largely because of three reasons: a lack of trained people for the jobs that are open, a generous welfare system for unemployed people in France that does not always motivate them to look for a job and a lack of adequate housing where many of the jobs are located.
Cholet, which owes the rise of its prosperity to the settlement of weavers in the 17th century, is situated in the thriving Pays de la Loire region. Its unemployment rate of 5.7 percent in the second quarter is far below the national level of 9.1 percent and among the lowest in the country, thanks to its strong position in industries ranging from services to construction to agro-food.
The skills shortage is particularly acute in digital, according to employers such as Matthieu Thibault, who is president of DSMI, an IT infrastructure company that is based near Nantes and employs about 70 people. “The challenge for my business is to keep growing,” he says. “The main difficulty is the recruitment and retention of qualified people in our field.”
Bouyer Leroux’s Besnard says that while companies have tried to reduce labor costs through automation, “we need competencies which are more specialized in automation management.”
It is a similar story at SDEI Ouest, a mechanical engineering company in Cholet. It has grown from 50 people in 2015 to more than 80 people today, and plans to reach 100 employees by 2021. The company is struggling to keep up with production because of hiring difficulties, according to director Bruno Fradet.
“There is a real shortage of skills in the engineering field, in particular automation and industrial robotics,” Fradet says. “We don’t find these types of people in our region and we need to be able to have the infrastructure such as housing to welcome families who move here for these jobs.”
Some companies are addressing these recruitment difficulties by looking for growth externally through mergers and acquisitions. Bouyer Leroux is in the middle of acquiring Soprofen, a French rolling shutter and garage door manufacturing business, which will take its revenues from 200 million euros to 320 million euros.
“We are looking for external growth because today there is the question of a critical mass,” says DSMI’s Thibault. “We make 30 million euros in revenues and it’s a little small in our business. Ideally, we would be at 100 million euros.”
At a national level, policymakers are also trying to play a part and encourage a Nordic model of lifelong learning. President Emmanuel Macron has put overhauling France’s system of professional training at the center of his ambitious reform agenda to bring down France’s stubbornly high unemployment rate and stimulate growth in the eurozone’s second-largest economy.
Between 200,000 and 330,000 vacancies were unfilled last year and the government hopes that by revamping the 32-billion-euro annual professional training scheme, it will be able to improve workforce skills, close the skills gap and cut unemployment. The French government in March announced that from January 2020, each worker, including those who work part-time, will be able to spend 5,000 euros over their careers on training courses of their choice.
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