Unemployment in France has reached a record high, even as the government narrows the deficit and economic growth is expected to increase.
2015 marked a reduction in the deficit, and finance minister Michel Sapin said the deficit was now at 3.5% of gross domestic product (GDP). This beats previous expectations of 3.8%.
The Eurozone has a treaty-imposed goal of a 3% of GDP budget deficit, putting France on track to reducing its deficit.
France also reported a 1.1% year-over-year growth in 2015, but the unemployment rate is forecast to rise to 10.5%.
But despite good news on the growth and deficit front, it was revealed that unemployment in France rose by 1.1% (link in French) in February alone.
France is known for having strong labour unions that fiercely protect their workers, but the current government is seeking to introduce laws to make hiring and firing workers a simpler process. In addition, the defacto 35-hour week would be eliminated.
Naturally, the changes have been met with protest, as the labour laws of France are held in high regard by many on the left. Some claim that lax labour laws could lead to job insecurity and may even drive up unemployment figures.
Calls for labour reform also has come from outside of France, with German Chancellor Angela Merkel repeatedly calling for French labour reform, especially with the backdrop of the Eurozone financial crisis. France is the Eurozone’s second-largest economy, and also has the second-largest population in the entire European Union with over 64 million people.
The government has insisted that the changes were necessary to create a more dynamic labour market able to reduce unemployment in France.
The move comes at a key time, and with a presidential election on the horizon next year, the government is looking to reduce unemployed and show leadership over the economy.
The French President François Hollande has stated that he won’t seek reelection next year if unemployment figures come down.