François Rebsamen “proud” of its balance sheet to unemployment: the reasons for its failure and so many others before him … – Atlantico.fr

Atlantico: At the newspaper Le Parisien (see here), François Rebsamen ensures leave the government with the feeling of having “done its job”. Yet the press calls his disappointing record because of an additional 200,000 unemployed during his tenure. What was its real impact on the labor market? And what are the real engines

Nicolas Goetzmann: That unemployment is on the rise or declining, it remains absurd to condemn or commend the action of a Minister for Employment. Just because the macroeconomic mechanisms that bite on the labor market are not within its jurisdiction. At best, the power of the minister is to propose unemployment management reforms overnight, including the employment center, which is useful but marginal in global dynamics. This is what can be seen for example when the minister talks about no growth as the main cause of the lack of results, that is to say 200,000 more unemployed, and in reality, 600,000 more unemployed since the arrival of Francois Hollande to power

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Because it means that the main driver of employment growth, whose engines escape it completely . These famous drivers of growth are twofold: the economic situation, or the level of “demand”, ie the level of economic activity that depends on the monetary policy in Europe and the structural situation of a country, that is to say the ability of a country to generate growth. We are talking about potential growth, which depends largely on demographic trends and the level of productivity in each country

Gilles Saint-Paul. The Minister of Labour has no impact on employment. Structural policies of the labor market, such as jobs or the future generation contract, are decided by the president and his party. Labour Minister is the head of an administration, which includes services such as labor inspection, or representing the state in multi-agencies like the employment center. The Minister’s role is to lead and arbitrate conflicts that date back to him. It is not he who decides employment policies. To what extent it has done its job, we must look at whether the administration was properly managed from the simple standpoint of efficiency. For example, it may have shown diligent and operational in the implementation of certain policies, which tells us nothing about the economic effectiveness of these policies.

The real drivers of the labor market are labor supply and labor demand. Public policies affect these long-term parameters through taxation and regulation, and short-term demand through policies such as fiscal or monetary policy. It is considered that long-term unemployment stood at an equilibrium level which depends mainly on supply-side policies. A more generous unemployment benefits, for example, tends to increase the equilibrium unemployment because it reduces the incentives to look for work. Another example: a stricter protection of workers in place, tends to increase the duration of long-term unemployment, because it imposes a cost on businesses by making it harder dismissal, which has an adverse impact on hiring. But it also decreases the incidence of unemployment, that is to say the number of workers who lose their jobs. Because of this, its net effect on employment is unclear

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From a point of view Overall, how can tie an employment policy within the eurozone? What part comes under European policy, and how much is a national policy?

Nicolas Goetzmann: The key point is within the European policy, through the mission of the European Central Bank. Most often, this organization is deemed to be the tool of the fight against inflation as its mandate indicates, that is to say the search for price stability with a maximum target of 2% of Inflation in the euro area. But in reality, it is not about “what” of inflation, because inflation and growth are two sides of the same coin, that is to say that the “demand”. Thus, the United States, the Fed has a more explicit mandate to fight against inflation, but also to seek maximum employment. The aim is to conduct monetary policy to achieve full employment, while remaining vigilant to not cause an increase in inflation above the target. The main tool of growth and employment in France and Europe, without no comparison, so the European Central Bank through monetary policy.

At the national level, beyond not being able to master the demographic trends, the government has various levers to improve the employment situation from a structural point of view. Labor costs, the level of protection of employees, their training, encouraging participation in the labor market etc … Such reforms can bear fruit, but on a longer time than monetary policy, and much less obvious effects in practice. In this case, it is to inflate the growth potential of a country, but we must remember that this potential can only be achieved with the support of monetary policy.

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