The unemployment rate remains stable, at its lowest level in 40 years

The labor market continues to resist: the unemployment rate remained stable in the first quarter of 2023, at 7.1% of the active population in France (excluding Mayotte), its lowest level for 40 years.

According to figures published Wednesday by INSEE, the number of unemployed within the meaning of the International Labor Office (ILO) reached 2.2 million people, barely decreasing over the quarter (-7,000). The institute, which had initially reported an unemployment rate of 7.2% in the 4th quarter of 2022, revised it slightly downwards (-0.1 point).

If we exclude the “trompe l’oeil” decline during the health crisis, we have to go back to the first quarter of 2008 (7.2%) and the second quarter of 1982 (7.1%) to find equivalent levels.

“Unemployment is thus at its lowest level for 40 years,” commented to AFP Yves Jauneau, head of the synthesis and economics division of the labor market at INSEE.

The Minister of Labor Olivier Dussopt immediately welcomed these results on Twitter, believing that they reflect “efforts to achieve the objective (of) full employment”, i.e. an unemployment rate around 5%. To achieve this, the government is counting in particular on the transformation of Pôle emploi into France Travail, with a bill which must be presented at the beginning of June.

For Mathieu Plane, economist at the French Observatory of Economic Conditions (OFCE), the results “confirm the solidity of the labor market”.

“The indicators are well oriented everywhere,” he adds, pointing in particular to the increase in the employment rate (ratio between the number of people in employment and the total number of people). For people of working age (15-64), it increased by 0.3 points and reached 68.6% over the quarter, its highest level since INSEE measured it (1975).

For Mr. Jauneau “this is a sign that with stable unemployment, employment continues to grow”.

– “Little black dot” –

In detail, over the quarter, the youth unemployment rate (15-24 years) fell very slightly by 0.2 points to 16.6%. For 25-49 year olds, it is almost stable (-0.1 point) at 6.4%. Finally, the unemployment rate for people aged 50 or over rebounded slightly over the quarter (+0.2 point) to 5.2%, but it remained below its level of a year earlier (-0.3 point).

The long-term unemployment rate (at least one year) was almost stable (-0.1 point) at 1.8%.

The “halo around unemployment”, i.e. people wishing to return to the job market but who are not considered unemployed by the ILO (actually looking for a job and being available to take one), is on the other hand increasing again. (+62,000 after +49,000 in the previous quarter). The share of the halo in the population of 15-64 year olds reached 4.6%.

It is “the only small black dot”, observes Mathieu Plane. The OFCE economist believes that “it is not necessarily easy to explain the reasons”, while on the other hand, underemployment is falling (-0.2 points).

Mr. Jauneau also sees it as “a little less of a good signal”, but notes that the halo remains “at a relatively average level”.

The next INSEE forecasts for the whole of 2023 will be published on June 15. In March, the institute predicted stability in the unemployment rate in the first half of the year.

For the OFCE, Mathieu Plane expects a turnaround in the labor market in the second half. “We think that we are a bit on a plateau and that gradually we will have a rise in the unemployment rate”, for different reasons: reduction of emergency aid, reduction of the budgetary wing, rate hike or even less learning bonus generous…

He notes that “in this context, with growth that is still relatively sluggish, it seems difficult to think that we will continue to create a lot of jobs and that unemployment will drop”, even if for the time being, ” we are still surfing on a labor market which remains relatively solid”.