The unemployment rate remains stable in the fourth quarter of 2023, at 7.5%

The Holy Grail of full employment is not for now: the unemployment rate remained stable in the fourth quarter of 2023, at 7.5%, according to figures published this Tuesday by INSEE, which slightly revised increases the rate of the previous quarter (0.1%). The unemployment rate is thus 0.4 points higher than its level at the end of 2022, which was the lowest since 1982, underlines the National Institute of Statistics. It remains significantly below its peak in mid-2015 (10.5%).

The Head of State, Emmanuel Macron, reiterated in mid-January the objective of reaching full employment in 2027, i.e. an unemployment rate of around 5%. When he arrived at the Élysée in 2017, the unemployment rate stood at 9.5%. It has fallen almost continuously since 2015, but the machine has started to stall in recent months.

“Unemployment is certainly at a low level compared to its long-term level, but for a year - even if, each quarter, the variations are not strong - we have had an increase in the unemployment rate, of 0.1 point on average each quarter,” underlines Yves Jauneau, head of the labor market synthesis and economic situation division at INSEE. “This therefore confirms the diagnosis of an upward turnaround in the unemployment rate,” adds the expert. “We are in a period of slowdown in the labor market”, which was also seen in the recent figures for private salaried employment (also stable in the fourth quarter), after a “very dynamic” period following the Covid-19 crisis, he continues.

For the future, Nathalie Chusseau, economist at the University of Lille, recalls that forecasters “anticipate a significant increase” in the unemployment rate for the year 2024. The OFCE (French Observatory of Economic Conditions) indicated in mid-October to expect an increase to 7.9% at the end of 2024. The Banque de France also predicted in mid-September that the unemployment rate would gradually rise to 7, 8% in 2025. And in December, INSEE forecast that unemployment would reach 7.6% in the first quarter of 2024, before stabilizing in the second quarter. Nathalie Chusseau points to a “difficult context”: “A slowdown in economic activity” and growth anticipated by the government for 2024 “probably too optimistic” (1.4%), inflation which is reducing but “weighs on the books orders”, or even “low productivity gains which persist”. In this context, “the full employment objective of 5% in 2027 is difficult to achieve,” she says.

Same observation for Mathieu Plane, economist at the OFCE: this objective “seems extremely difficult given the context”, he says. Especially since the pension reform, which raised the retirement age to 64, “will mechanically increase the number of active people on the labor market”. With at the same time new arrivals of young people, there are “around 500,000 more workers by the end of 2027 that businesses will have to absorb,” adds the economist.

To achieve full employment, the government is focusing in particular on the transformation of Pôle emploi into France Travail, with more cooperation between the different job search assistance organizations. At the request of the government, unions and employers are considering solutions to increase the employment rate of seniors, with the objective of an employment rate of 65% “by 2030” for 60-64 year olds (compared to 36 .2% in 2022). Work which should lead to an agreement at the end of March.

The Head of State also announced during his press conference on January 16 an “Act II of labor market reform”. Its contours remain unclear, but the Prime Minister, Gabriel Attal, announced a bill for the start of the school year. He said he wanted to “go further in the reform of unemployment insurance” and warned that it would be renegotiated in the event of financial slippage, raising concerns among the unions.