"Employment Indicators Improve After French Labor Reform... Should Be Referenced in Korean Labor Policy"

Effects Follow Labor Reform: Unemployment Rate Drops, Employment Rate Rises, and Full-Time Positions Expand

There has been a claim that France's labor reforms have been effective in improving employment indicators, and that we should refer to this and actively strengthen labor market policies.

＜Left＞Change in Unemployment Rate in France ＜Right＞Change in Employment Rate in France

On the 21st, the Korea Economic Research Institute (hereinafter 'KERI') announced that France achieved clear results in improving employment indicators through labor reforms that enhanced employment flexibility and eased regulations. France's unemployment rate was in the 10% range from 2013 to 2016 before the labor reforms, but fell to 7.3% in 2022. Notably, even during the COVID-19 pandemic period when the OECD average unemployment rate rose from 5.4% in 2019 to 7.2% in 2020, France's unemployment rate continued its downward trend. Additionally, France's employment rate rose from a stagnant 64% range during 2013-2015 to 68.1% in 2022. The proportion of full-time positions in total employment also increased from the 81% range during 2013-2016 to 83.0% in 2020.

KERI analyzed that these improvements in employment indicators were the result of France's continuous labor reforms following the 2016 revision of the Labor Law. Through the 2016 Labor Law revision, France expanded employment flexibility by simplifying dismissal criteria. Subsequently, in 2017, labor reforms were implemented that included ▲ expanding companies' discretion over labor conditions ▲ integrating three mandatory organizational bodies within companies?employee representatives, health and safety committees, and worker consultative bodies ▲ setting a cap on unfair dismissal compensation at a maximum of 20 months' salary. In 2018, regulatory easing also improved the efficiency of vocational training.

France is currently pursuing reforms to unemployment benefits as well. The required minimum working period to qualify for unemployment benefits is being increased from 'at least 4 months within the 28 months prior to unemployment' to 'at least 6 months within the 24 months prior to unemployment.' For high-income earners under 57 years old who earned more than 4,500 euros per month before unemployment, the amount of unemployment benefits can be reduced starting seven months after job loss. Through this reform, France plans to establish a safety net that does not undermine the motivation to work.

KERI stated that France's labor reforms hold significant implications for us. Eugene Sung, a senior researcher at KERI, argued, “Our country also needs to prepare institutional conditions to relax protections for regular employment in the future, thereby expanding companies' incentives to hire and creating quality jobs.” He added, “It is necessary to ensure that unemployment benefits do not reduce the motivation to work for the unemployed,” and advised, “There is also a need to strengthen active labor market policies such as vocational training and employment incentives.”

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