France: Is the Job Market at a Crossroads?

French employment has slowed down since the first quarter of 2024 after being particularly dynamic following the pandemic , with over 1.2 million jobs created since the beginning of 2019 . The unemployment rate has remained broadly stable since the beginning of 2024 despite the slowdown in employment : in Q1 2025, the unemployment rate stood at 7.4%, compared to 7.3% in Q4 2024 , and 7.5% at the beginning of 2024 . However, t his relative stability of unemployment rate reflect s a significant slowdown i n employment, going hand in hand with a decline in the labor force. Recent indicators of household confidence reflect growing concerns about a rise in unemployment over the coming quarters . Given the expected economic growth below potential in France for 2025 at 0.6% , we expect an increase in unemployment rate this year, to reach 7.8% in Q4 2025. Unemployment rate will then stabilize shortly, before decreasing throughout 2026. At the beginning of 2025, labor productivity remained over 2% below its level at the start of 2019 and nearly 6% below its pre-Covid trend . Recent analyses indicate 'permanent losses' of approximately 4 pp . Following the pre-Covid trend – to which it seems to have returned – and considering the shock's impact, labor productivity would remain slightly below its pre-pandemic level until the end of 2026 . Under the assumption of a catch-up of temporary productivity losses over the next two years, estimated at around 1.5pp, labor productivity would be above its 2019 level by end 2026.