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France: Protecting the insiders in the crisis and forgetting the outsiders?

Abstract : Like many other countries, France was seriously hit by the recent crisis. Gross domestic product (GDP) fell sharply from the second quarter of 2008, and 300,000 jobs were lost during 2008-2009. The unemployment rate jumped from 7.2 per cent at the beginning of 2008 to 9.5 per cent at the beginning of 2010, the highest level since 1999. But the loss of jobs was not the only consequence of the crisis: many workers saw their wages reduced, because of a reduction in their working time and/or hourly compensation. All workers are not affected the same way. At first sight, an economic crisis should exacerbate inequalities - between the 'losers' who have lost their job or experienced a wage drop - and the 'lucky ones', who have not. But assessing the detailed impact of the crisis on inequalities is a quite complex matter. The first reason for this is the difficulty of clearly identifying outcomes with appropriate data. If data on employment are easily and rapidly available, data on wages and outcomes, and even more, on working conditions, may not be available without delay, or in sufficient detail. But, even when data are available, difficulty arises from the timing of the different impacts of the crisis. One must differentiate between the short-term and medium- or long-term effects of the crisis. In the long term, the so-called 'hysteresis' effects should also be taken into account. The employability of the long-term unemployed, but also of new entrants to the labour market, may be lastingly affected by the crisis, and this may help to exacerbate inequalities for years to come. A second source of complexity is related to the difficulty of identifying the various factors at play that may contribute to influencing and 'shaping' outcomes in terms of inequality. The same economic shock may have different consequences across countries - in terms of employment, wages and incomes, or working conditions - depending on national institutional contexts. Regulatory institutions play an important role. French wage-fixing mechanisms, with a legal national minimum wage (the so-called 'SMIC' - see Gautié, 2008), which is relatively high compared to the median wage, as well as the legal extension of collective agreements, limit the possibility for firms to adopt 'social dumping' strategies based on wage cuts. Employment protection legislation (EPL) is also important, because it shapes firms' choices in terms of hiring and dismissals. According to the OECD index, EPL is at a fairly high level in France in comparison to many other countries. This may explain why the (short-term) elasticity of employment to economic activity is lower than in more 'liberal' countries, such as the United States or the UK. But a high level of EPL is also usually correlated with a high proportion of temporary workers (OECD, * Université Paris I Panthéon-Sorbonne, Centre d'Economie de la Sorbonne et Institut des Sciences Sociales du Travail. I would like to thank Gurdal Aslan for research assistance. I am very grateful to Sébastien Archi, Béatrice Delay, Jacques Freyssinet, Fabien Gache, Arnaud Hentz, Ricardo Madeira, Jean-Christophe Toutlemonde and Alain Wagmann. 2 2004), and therefore, a higher degree of dualism between 'insiders', on relatively protected permanent contracts, and 'outsiders', on temporary contracts which play a role as an adjustment variable during economic downturns. Indeed, the share of temporary workers among all employees amounted to about 13 per cent in France at the beginning of 2008, and during the first fourteen months of the crisis (April 2008-June 2009) more than half of all job losses were concentrated on temporary agency workers. But France is also characterised by a high level of 'social protection' - including labour market policies - and this should limit the social impact of the crisis in terms of employment and, above all, income. But one must scrutinize the coverage and entitlement rights of different categories of people to assess the degree of inclusiveness of the social protection system. Social dialogue may also play a role in the way the crisis affects inequalities, depending on how unions and employers take into account the interests of different categories of workers. Unionization is low in France (about 5 per cent in the private sector), and unions are weak and often divided at the firm level. Social dialogue is usually more vivid at industry and national levels, and unions also play a role in the social protection system, for instance, regulating the unemployment insurance system. France is also characterised by a complex interplay between the social partners (unions and employers' organizations) and the state, which impacts notably on labour market policies and regulations, as well as on social policies. All these features may contribute to an explanation of the outcomes of the crisis in terms of employment and incomes. Section 2 presents the main symptoms of the crisis, in terms of growth and employment (at both global and industry levels). Section 3 assesses its impact on employment and unemployment inequalities, as well as on job quality - but the latter is harder to assess, because of lack of data. Section 4 turns to inequalities in wages and incomes, and Section 5 assesses the role of public policy and social dialogue. In Section 6, we present two case studies that illustrate the unequal impact of the crisis in terms of employment and compensation: the first focuses on short-term compensation schemes, the second on measures taken in favour of temporary agency workers. Section 7 presents some concluding remarks
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Contributor : Jérôme Gautié <>
Submitted on : Friday, July 8, 2011 - 4:59:15 PM
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Jérôme Gautié. France: Protecting the insiders in the crisis and forgetting the outsiders?. Daniel Vaugham-Whitehead. Work Inequalities in the crisis - Evidence from Europe, Edward Elgar Publishing, pp.197-276, 2011. ⟨halshs-00607385⟩



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