World Economy

Record Unemployment in Crisis-Hit France

Record Unemployment in Crisis-Hit FranceRecord Unemployment in Crisis-Hit France

Unemployment in France hit a new record in October, with official statistics published Thursday showing 3.46 million people claiming jobless benefits.

The figures showed a rise of 28,400 people on the jobless queue compared to the previous month and came as President Francois Hollande marks the midway point in his troubled mandate, AFP reported.

The unemployment numbers were up 0.8 percent compared to September and 5.5 percent in comparison to the previous year.

In a mid-term interview earlier this month, he said he would not stand again for the French presidency in 2017 if he had not managed to live up to his promise to bring down unemployment by then.

France’s economy is barely growing, showing a gain of 0.3 percent in the third quarter. The government is Paris has forecast 0.4 percent growth for the full year.

Many economists believe an average of 1.5 percent growth is needed to reduce unemployment.

Even France’s own economy minister Emmanuel Macron has admitted that the economy is “sick”.

The government has introduced a much-vaunted but highly disputed “Responsibility Pact”, which will cut social charges for businesses by 40 billion euros ($51 billion) in exchange for them creating 500,000 jobs by 2017.

Given the parlous state of France’s budget deficit, which is expected to remain above European Union limits until 2017, Hollande plans to finance the tax breaks with 50 billion euros in public spending cuts.

This has proved highly unpopular on the left flank of Hollande’s ruling Socialist Party, which sees it as a gift to business.

  A Relief

France and Italy will escape immediate punishment over weaknesses in their 2015 budget proposals as the European Union tries to balance the need for continued austerity with a desire for greater investment, Bloomberg reported.

The European Commission, the EU executive in Brussels, will Friday warn French President Francois Hollande and Italian Prime Minister Matteo Renzi that their governments may face action in March if they do not follow through on written pledges on cutting deficits and making their economies more competitive.

“I insisted in my discussions with Hollande and Renzi that I want to see timetables for these reforms,” commission President Jean-Claude Juncker said in an interview published Friday in Belgium’s Le Soir newspaper. “These cannot just be promises.”

French Finance Minister Michel Sapin said the postponement will allow the EU to see details of the execution of France’s budget. The commission “is taking account of certain realities,” Sapin said Thursday in Paris.

Economists say an average of 1.5% growth is needed to reduce unemployment.