French Jobless Rate Rises to Highest in More Than Three Years

By Mark Deen

Sept. 3 (Bloomberg) -- France’s unemployment rate climbed to the highest in at least three years in the second quarter as companies cut jobs in an effort to squeeze costs after the worst recession since World War II.

The jobless rate rose to 9.5 percent from a revised 8.9 percent in the first quarter, Paris-based statistics office Insee said today. Excluding France’s overseas territories, the unemployment rate increased to 9.1 percent from a revised 8.5 percent in the first three months of the year.

While France exited a yearlong recession in the second quarter, with gross domestic product expanding 0.3 percent, economists expect more job cuts as companies implement decisions taken when the economy was shrinking.

“Assuming the turning point in the economy came in the second quarter, that would imply unemployment peaking at the beginning of 2010 at the earliest,” Laurent Bilke, an economist at Nomura International in London, said by phone before today’s report. “Jobs decisions are very heavy, they’re the last thing you adjust.”

Companies such as Alcatel-Lucent SA and Air France-KLM Group are trimming their workforces to match weaker sales triggered by the recession.

Almost 700,000 jobs will be shed in 2009, Insee forecast last month. So far this year, 420,900 jobs have been lost, according to Labor and Finance Ministry numbers.

The government is preparing for further job cuts this year by hiring employment agencies to help jobseekers find temporary work. In June, the Finance Ministry began offering 1,000 euros ($1,428) to companies for every person hired as an apprentice in an effort to combat youth unemployment. The measure is scheduled to remain in place for one year.

Unemployment will rise to 11.2 percent in 2010 from 9.7 percent this year and 7.4 percent in 2008, the Paris-based Organization for Economic Cooperation and Development predicted on June 24. The French economy will shrink 3 percent this year and grow just 0.2 percent in 2010, the OECD said.

The statistics office originally reported an overall jobless rate of 9.1 percent in the first quarter and a mainland rate of 8.7 percent.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net