Chart of the week: French wage inflation gathers pace

French wage inflation and recruitment difficulties

One of France’s biggest problems is “chronic structural unemployment”, says Yvan Berthoux of Halkin Services, and one of the key reasons for it is a “mismatch” between workers’ abilities and companies’ requirements.

The system just doesn’t produce enough skilled workers. Unemployment is now at a ten-year low of 8.8% and almost 50% of firms are reporting difficulties getting hold of the workers they need. This problem is “creating production bottlenecks” and boosting the annual rate of wage inflation.

Another quirk of the French labour market is generous unemployment benefits; these tend to reduce the pool of labour looking for work, which also implies higher salaries.