After a stand-out performance in 2019, the French labour market’s performance was even more remarkable in 2020 given the massive recessionary shock that swept the French economy. In part 1 of this article, we conducted a review of this very peculiar year in which the Covid-19 crisis had a much smaller impact on the French labour market than on GDP growth.
What should we expect in 2021? Will the labour market continue to surprise on the upside? Although we cannot rule out this possibility, for now, prospects seem to be more mixed. Payroll employment is expected to rebound, but the unemployment rate is also expected to pick up. And the size of these moves is highly uncertain. To be more precise, the balance of risks leans towards a mild increase in employment and a big rise in the jobless rate. This article will review he support factors and headwinds currently at work.
Payroll employment is set to rebound, but by how much?
Concerning the outlook for employment, there can be little doubt but that the situation is poised for a rebound in 2021. The big question is by how much? We can reasonably expect the year-onyear increase to be positive by the end of 2021. But will employment rebound sufficiently over the course of the year to return to pre-crisis levels by year-end 2021? Will the annual average growth rate swing back into positive territory? This would already be a significant improvement. Will it be strong enough to close the gap with job destructions in 2020 (when payroll job destructions averaged 328k)? Although we can answer the first two questions in the affirmative, the third hypothesis seems highly unlikely.
Government forecasts clearly illustrate the different messages circulating with these figures, depending on whether they are presented yearon- year or as the annual average. In 2021, the most positive signal is from the year-on-year change in employment, whereas in 2022 it is the annual average increase. The government’s forecasts are summarised in Table 1: the most recent figures are from the April 2021 edition of the Stability Programme, while the others are part of the 2021 budget, published in October 2020. This table also illustrates how employment surprised favourably in 2020: year-omarket than on GDP growth2.n-year job losses were a little over half the size previously expected. The more limited employment fall in 2020 translates into a more limited rebound in 2021 on a year-on-year basis, in the most recent forecasts for the Stability Programme. Since the negative carry-over was smaller, however, the 2021 annual average increase swung into positive territory, albeit slightly.
The reason why we expect to see a mild rebound in employment in 2021 is because there will be fewer and less strong tailwinds than headwinds. Among the support factors, there is of course the expected rebound in growth. There are also the specific positive effects of the youth employment plan, and more globally, of the France Relance recovery plan (+240,000 jobs by 2022 and +120,000 in the long term, according to government estimates presented in the Economic, Social and Financial Report as part of the 2021 budget). There is also the impact of the reforms already underway (see chart 2). Yet caution is still needed given the high uncertainty over the vigour of the recovery, the impact of support measures and the job-rich content of the recovery. However, Pôle emploi’s 2021 survey on companies’ labour need, released early May, sends an encouraging signal, with 2.72 million hiring plans, or 30,000 more than in 2019.
BNP Paribas is regulated by the FSA for the conduct of its designated investment business in the UK and is a member of the London Stock Exchange. The information and opinions contained in this report have been obtained from public sources believed to be reliable, but no representation or warranty, express or implied, is made that such information is accurate or complete and it should not be relied upon as such. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy any securities or other investment. Information and opinions contained in the report are published for the assistance of recipients, but are not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient, they are subject to change without notice and not intended to provide the sole basis of any evaluation of the instruments discussed herein. Any reference to past performance should not be taken as an indication of future performance. No BNP Paribas Group Company accepts any liability whatsoever for any direct or consequential loss arising from any use of material contained in this report. All estimates and opinions included in this report constitute our judgements as of the date of this report. BNP Paribas and their affiliates ("collectively "BNP Paribas") may make a market in, or may, as principal or agent, buy or sell securities of the issuers mentioned in this report or derivatives thereon. BNP Paribas may have a financial interest in the issuers mentioned in this report, including a long or short position in their securities, and or options, futures or other derivative instruments based thereon. BNP Paribas, including its officers and employees may serve or have served as an officer, director or in an advisory capacity for any issuer mentioned in this report. BNP Paribas may, from time to time, solicit, perform or have performed investment banking, underwriting or other services (including acting as adviser, manager, underwriter or lender) within the last 12 months for any issuer referred to in this report. BNP Paribas, may to the extent permitted by law, have acted upon or used the information contained herein, or the research or analysis on which it was based, before its publication. BNP Paribas may receive or intend to seek compensation for investment banking services in the next three months from an issuer mentioned in this report. Any issuer mentioned in this report may have been provided with sections of this report prior to its publication in order to verify its factual accuracy. This report was produced by a BNP Paribas Group Company. This report is for the use of intended recipients and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without the prior written consent of BNP Paribas. By accepting this document you agree to be bound by the foregoing limitations. Analyst Certification Each analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the analyst's personal views about any and all of the issuers and securities named in this report, and (ii) no part of the analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed herein. United States: This report is being distributed to US persons by BNP Paribas Securities Corp., or by a subsidiary or affiliate of BNP Paribas that is not registered as a US broker-dealer, to US major institutional investors only. BNP Paribas Securities Corp., a subsidiary of BNP Paribas, is a broker-dealer registered with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers, Inc. BNP Paribas Securities Corp. accepts responsibility for the content of a report prepared by another non-US affiliate only when distributed to US persons by BNP Paribas Securities Corp. United Kingdom: This report has been approved for publication in the United Kingdom by BNP Paribas London Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas London Branch is regulated by the Financial Services Authority ("FSA") for the conduct of its designated investment business in the United Kingdom and is a member of the London Stock Exchange. This report is prepared for professional investors and is not intended for Private Customers in the United Kingdom as defined in FSA rules and should not be passed on to any such persons. Japan: This report is being distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited, Tokyo Branch, or by a subsidiary or affiliate of BNP Paribas not registered as a financial instruments firm in Japan, to certain financial institutions permitted by regulation. BNP Paribas Securities (Japan) Limited, Tokyo Branch, a subsidiary of BNP Paribas, is a financial instruments firm registered according to the Financial Instruments and Exchange Law of Japan and a member of the Japan Securities Dealers Association. BNP Paribas Securities (Japan) Limited, Tokyo Branch accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited, Tokyo Branch. Hong Kong: This report is being distributed in Hong Kong by BNP Paribas Hong Kong Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas Hong Kong Branch is regulated as a Licensed Bank by the Hong Kong Monetary Authority and is deemed as a Registered Institution by the Securities and Futures Commission for the conduct of Advising on Securities [Regulated Activity Type 4] under the Securities and Futures Ordinance Transitional Arrangements. Singapore: This report is being distributed in Singapore by BNP Paribas Singapore Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas Singapore is a licensed bank regulated by the Monetary Authority of Singapore is exempted from holding the required licenses to conduct regulated activities and provide financial advisory services under the Securities and Futures Act and the Financial Advisors Act. © BNP Paribas (2011). All rights reserved.