After Germany Cuts GDP Forecast, Unemployment Rises in France

Investing

Published: March 26, 2013 2:02 pm

Last Updated: March 26, 2013 2:03 pm

President Francois Hollande is having a rough time of living up to his labor promises if you read into the unemployment rate in France. The jobless rate rose for what is now going on to be almost two years to the highest level in more than 15 years. The so-called category-A job seekers rose 10.8% year over year to 3.187 million.

It was just yesterday that Germany downgraded its own annual gross domestic product (GDP) growth, from 0.8% expected at the end of 2012 down to growth of only 0.3%. With Germany being the top economy in Europe, we could not help but propose that if Germany is lowering its GDP outlook for the full 2013 then this was probably a downgrade for the whole of Europe as well.

France is the second largest economy in Europe and is the second most stable of the original entrants, or at least that is how the theory works in size. The Category B and Category C job seekers in France also rose to 1.519 million in February with a B-class being down 0.1% and C-class up 1%.

In total, the number of job seekers registered came to 4,706,700 in France in 2013, an increase of 0.6% in February. Year over year it increased by 9.8%.

President Francois Hollande sold the public that higher taxes on the wealthy and cutting the degree of austerity on benefit payments and other austerity cuts were all going to solve their situation. It has not worked, and barring a miracle it will not and cannot work. The wealthy are leaving and the employment situation is worse.

If Hollande wanted to really help out labor, he should have just proposed trying to pass a law making it mandatory for companies to hire workers even if there was no work. The French companies would have of course revolted, but it would have at least been a real effort to drive employment and it would have been an honest admission of the situation.

Somehow it does not work when you hit the wealthy with higher taxes. They don’t exactly just decide to become patriotic and hire to the point that they pay the public until they are not wealthy. They just leave. The biggest problem with socialism is that ultimately you run out of other people’s money to tax.

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