How France is trying to combat job loss during the pandemic

Despite uncertainty about the future, hundreds of thousands of businesses in France are being thrown lifelines as the government deploys a targeted plan aimed at keeping every worker possible employed, according to a recent article in the New York Times, which notes that “France is rapidly emerging as a test case of whether a country can hasten the recovery from a recession by protecting businesses from going under in the first place, and avoiding mass joblessness.”

France and other European Union countries are deploying a more encompassing state-led approach in the event that the epidemic takes months, rather than weeks, to contain, as the article notes. “There’s a very different strategy in Europe than in the United States about how to manage this recession,” said Patrick Artus, chief economist of Paris-based Natixis Bank. “The idea is to have no layoffs or company closures, so that when the coronavirus is finally under control the economy can start right back up.”

During the 2008 financial crisis, France did not take aggressive steps to support workers and businesses, and unemployment rose to around 10 percent and stayed high for the next five years. In the current crisis, the French government is spending 45 billion euros ($50 billion) to pay businesses not to lay off workers. Deadlines for taxes and loan payments are delayed. Another €300 billion in state-guaranteed loans are being extended to any struggling company that needs them.

Over 337,000 businesses have already put 3.6 million employees on paid furlough to be reimbursed by the state, the Labor Ministry said. Officials expect the numbers to more than double as it receives “several thousand requests per minute.”

The NYT says the plan isn’t without risks. European leaders are wary of relaunching the economy before the epidemic is under control. But the tsunami of fiscal support by France and its neighbors — over €2 trillion in spending and loan guarantees combined — can be sustained only a few months, economists say.

The risk extends to the businesses as well, the article goes on to say, which must continue to pay one-fifth of the salaries of employees who aren’t working. If the economy doesn’t rebound by autumn, companies say, they may yet be forced to revert to layoffs.