Proactive fiscal measures, exports, and very ugly automatic stabilizers seem to have slowed the decline in employment, coupled with productivity increases that are supporting output with lower levels of employment.
August 14 (Bloomberg) — French companies cut fewer jobs than expected in the second quarter as the euro areaâ€™s second-largest economy exited its worst recession since World War II.
Payrolls, excluding government employees, farm workers and the self-employed, dropped by 74,100, or 0.5 percent, to 15.65 million, the Paris-based Labor Ministry said today. That was less than the 0.8 percent drop forecast by three economists in a Bloomberg News survey, and compared with a loss of 168,300 jobs in the first quarter.
â€œThe current weakness of domestic demand and excess production capacity account for both the weakness in companiesâ€™
pricing power and the continued deterioration of the labor market,â€ said Caroline Newhouse-Cohen, an economist at BNP Paribas, in a report yesterday. â€œA lot of uncertainties are still weighing on the French economy.â€
The French economy returned to growth in the second quarter as exports rose and 30 billion euros ($42.8 billion) in government spending and tax cuts introduced by President Nicolas Sarkozy helped consumer spending. Companies cut investment at a slower pace than in the two previous quarters.
Rising joblessness in France is curbing government revenue and boosting welfare spending, pushing up the budget deficit.
The budget shortfall will soar to 8.3 percent of gross domestic product next year, more than the 7 percent to 7.5 percent the government expects, according to the Organization for Economic Cooperation and Development.
Franceâ€™s jobless rate hit a three-year high of 9.4 percent in June, the European Union statistics office said on July 31.
On Aug. 11, Adecco SA, the worldâ€™s largest supplier of temporary workers, reported a surprise second-quarter loss and said it will deepen cost cuts as sales decline because fewer companies are hiring. The company, based in Zurich, cut about 2,000 jobs in the quarter and told workers in France that an additional 350 jobs will be cut and 100 branches merged in 2009.
The number of temporary workers in France fell 3.7 percent in the second quarter from the first and 32.1 percent from a year earlier to 419,600, the Labor Ministry said. French monthly wages rose 0.4 percent in the second quarter from the first, when they climbed 0.8 percent, the Labor Ministry also said today. From a year ago, wages rose 2.2 percent.