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French Wage Growth Accelerates
World Economy

French Wage Growth Accelerates

Wages for French workers grew at their fastest pace in three years at the start of 2017–showing welcome signs of acceleration as the country prepared for its major presidential election.

Quarterly wage growth picked up to 0.6% from 0.1% in the three months to March, according to official statistics, in a period when inflation in the French economy approached its highest in four years, Bloomberg reported.

France’s labor market has shown encouraging signs of improvement this year amid a brightening recovery in Europe. The country’s sluggish unemployment rate has dropped to its lowest since the eurozone crisis at 9.6% but still remains above the bloc’s average of 9.3%.

President Emmanuel Macron, who looks set to secure a comprehensive parliamentary majority this weekend, has vowed to shake up the country’s employment laws. Macron has proposed a Nordic-style economic model, which gives companies flexibility to negotiate pay packets, while entrepreneurs would enjoy more tax breaks.

France will head for its final round parliamentary election on Sunday with the initial vote last week suggesting the president’s Republique en Marche will secure around 450 seats in the 577-seat parliament.

Wage growth has proven to be an elusive element in the economic recoveries across the developed world after the financial crisis. Despite the gains in employment, the European Central Bank has promised to stick with its aggressive crisis-era stimulus measures until earnings pick up pace.

Hiring surged in France in the first three months of the year, providing a strong stage for Macron’s economic plans. Employment rose by 89,700 in the first quarter, a rise of 0.4%--the fastest rise in a decade. The vast majority of that was in the private sector as businesses’ headcount rose by another 80,300.

 

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