the essential
Multiplication of social plans, hiring freeze, slow growth… the French economy is turning around. Threats to employment are increasing against the backdrop of a 2025 budget which could cause a recession.
The tide is really turning for the French economy. This Tuesday, November 5, Auchan unveiled a job protection plan (PSE) eliminating 2,389 positions in France. The fifth French distributor posted a loss of one billion euros over the first six months of the year, requiring massive restructuring. The same day, Michelin announced the closure of its factories in Vannes and Cholet by 2026 with 1,250 jobs at risk due to the collapse in sales volumes.
Automobile, construction… Social hemorrhage
The automobile industry, which has just experienced its sixth month of decline in sales in France (-11% over one year), is starting to cut its workforce. Stellantis announced the elimination of 250 temporary jobs in its factory near Rennes from January 2025 to cope with the drop in sales. Its boss, Carlos Tavares, does not rule out “factory closures in Europe” in the wake of its competitor Volkswagen which will close three factories in Germany and eliminate tens of thousands of jobs. In this context, contagion to the automotive equipment supplier sector is only a matter of months. In 2025, the European Association of Automotive Suppliers (Clepa) fears the worst employment crisis in its history.
If the automobile industry falters, the building sector, whose new construction has been collapsing for two years (-20 to -25% in 2024), is now suffering collateral damage: the manufacturer of boilers and heat pumps Saunier Duval is cutting 225 jobs. (out of 730) on its Nantes site. The French Building Federation fears 90,000 job losses by the end of 2024 then 150,000 by mid-2025.
257,000 fewer recruitment projects in 2024
The first signals of a decline in employment were known at the start of 2024. In its major annual study on labor needs, France Travail noted in April a clear decline in the desire to hiring for the year 2024 from companies. 257,000 fewer recruitment projects than the previous year. Hiring intentions for this year fell by 8.5% in 2024 (2.78 million) compared to 2023 (3.03 million).
Is this a sign of the limits of the policy of Emmanuel Macron who created France Travail on 1is January 2024 to achieve the “full employment objective” (sic). With the reduction in social security contributions and tax pressure, the executive has wanted to support employment since 2017. It worked: 1.2 million net jobs were created between mid-2017 and the end of 2021. The reindustrialization plan also made it possible to relocate factories and recreate jobs but now that the economic situation is deteriorating the objective reaching 5% unemployment seems out of reach.
Will the 2025 budget cause a recession?
Even if the unemployment rate fell by another 0.2 points in the second quarter to fall to 7.2% at the end of June, INSEE remains very cautious for the end of the year. The institute expects unemployment to rise to 7.6% by December as France enters a “phase of slowdown in the labor market”. A good maintenance of French economic growth will be the only hope to avoid the social crisis in 2025. The Banque de France is counting on an encouraging + 1.2%. Everyone wants to believe it, starting with employees, but the government's austerity budget will cause inevitable recessive effects. Certain communities, the country's leading investors, have already triggered a hiring freeze.
France
