10 November 2020

2020- n° 287

In Q3 2020, the unemployment rate bounced up sharply to 9.0 % ILO Unemployment and Labour Market-related indicators (Labour Force Survey results) - third quarter 2020

In Q3 2020 the number of ILO unemployed people reached 2.7 millions in France excluding Mayotte, increasing by 628,000. The ILO unemployment rate jumped by 1.9 points over the quarter to 9.0 % of the labour force, after a 0.7 point decline in the previous quarter. It was 0.9 points higher than its pre-crisis level in Q4 2019.

In Q1 and Q2 2020, the fall in ILO unemployment was a trompe-l'oeil one. A large number of jobless persons, whether they wanted to work or not, had not been actively looking for a job due to the containment period and therefore did not meet the ILO's criteria for being counted as unemployed people. Labour search behaviours resumed in Q3; consequently unemployment rose sharply in Q3 2020. The rebound in unemployment over the quarter is of a magnitude not seen since INSEE has been measuring it (1975). But it is partly mechanical, as a result of the trompe-l'oeil decline due to containment in Q2 2020. However, the increase in unemployment compared to either Q3 2019 (+0.6 points) or Q4 2019, highlights a clear deterioration in the labour market.

The rise in unemployment rate was more pronounced for people aged 25 to 49 (+2.1 points) and those aged 50 and over (+1.7 points) than among youths (+0.9 points). However, the unemployment rate for people aged 15 to 24 increased in the previous quarter, unlike that of their elders. Overall, the unemployment rate increased more for young people year-to-year (+2.6 points) than for other age groups.

The unemployment rate fell more sharply in S1 2020 for women (-1.2 points) than for men (-0.8 points). As it rebounded more strongly for women, the unemployment rates for men and women were again almost equal in Q3, as was the case before the crisis.

Among inactive people as defined by the ILO, 1.7 millions wished to work without being considered as unemployed according to the ILO definition: they made up the halo of unemployment. Their number went back to normal in Q3 2020 after an exceptional peak in the previous quarter (a jump of 765,000 in Q2 followed by a drop of 801,000 in Q3). The peak in the halo of unemployment in Q2 2020, due to containment, was the main counterpart to the fall in unemployment at the same time. It was mainly made of jobless people wishing to work and available to do so, but not actively searching for a job. With the end of the containment period, unemployed persons resumed their active job search, mechanically reducing the number of people in the halo of unemployment. Thus the share of people in the halo in the 15-64 years old population fell by 2.0 points quarter on quarter, after a 1.9  point rise in the prevous quarter. It went back to 4,0 %, its pre-crisis level at the end of 2019.

On average the employment rate for 15-64 year olds increased by 0.7 points in Q3, to 65.1%, after a sharp decline (-1.6 points) in the second quarter. It picked up for all age and sex groups. The rise was particularly marked for young people (+2.1 points, to 28,7%) whose employment rate reached a historical low in the previous quarter. The employment rate fell less for women in the previous quarter (-1.2 points, compared with -2.0 points for men) and recovered less in Q3 (+0.4 points, compared with +1.0 point for men).

The rebound in Q3 2020 only partially offset the previous quarter decline. Indeed the employment rate remained below its end of 2019 level before the health crisis: 0.9 points below for the 15-64 years old population, 0.8 points for people aged 15 to 24, 1.1 points for those aged 25 to 49, with a decline limited to 0.1 points for those aged 50 to 64.

As a result of the exceptional partial activity framework during the containement period (short-time working / temporary lay-off), underemployment reached an exceptional peak in Q2 2020 at 20.0% of employed people, including 15.4% of people in technical or partial unemployment. In Q3 2020, this share fell back (-12.8 points) to a more usual level of 7.2%. This return to normal is mainly due to the sharp drop in the number of people in technical ou partial unemployment (-13.3 points). On average over the quarter, their share stood at 2.1% and remained above its pre-crisis level (+1.8 points compared to the end of 2019). Overall underemployment was also 1.7 points higher than its end of 2019 level.

All in all, in Q3 2020, nearly one in five labour market participants (active people or people in the halo of unemployment) were constrained in their labour supply by either a lack of employment (unemployed people or in the halo of unemployment) or a situation of underemployment. This share fell back by 11.6 points over the quarter to 20.1% but stood 2.4 points above its end of 2019 level due to unemployment and underemployment.

After an unprecedented low in the previous quarter (-13.0%) mainly due to partial unemployment, the average number of weekly hours worked per job rose by 20.7% in Q3 2020 to 31.0 hours per week (seasonally adjusted data). Thus, the average number of hours worked per job largely returned to its level a year earlier (31.6 hours per week).

Full-time employment rate stood at 53.9% in Q3 2020. It advanced by 0.4 points over the quarter but was 0.5 points below its end of 2019 level. Part-time employment rate was on the same path (+0.3 points over the quarter, -0.4 points compared to the end of 2019).

Permanent employment rate for people aged 15 to 64 stood at 49.2% in Q3 2020. It was virtually stable (+0.1 points) over the quarter, after a 0.4 point decrease in Q2. It was 0.3 points below its end of 2019 level. Fixed-term and temporary employment rate picked up by 0.5 points, after a sharp decrease (-1,2 point) in the previous quarter. At 6.9%, it stood 1.2 points below its peak at the end of 2017 and 0.7 points below its end of 2019 level.

The activity rate of people aged 15 to 64 increased by 2.2 points over the quarter, at 71,6 %, after a similar size decline in the previous quarter. All age and sex groups showed a rise. It was more pronounced for young people (+3.1 points) and for people aged 25 to 49 (+2.5 points), whose activity declined more in the first semester.

The average increase over the quarter was the result of both the increase in the employment rate and the shift from the halo of unemployment (inactivity) to unemployment (labour force participation).

However, the activity rate was below its end of 2019 level, before the health crisis: 0.2 points lower for the whole population, 0.4 points lower for women, especially those aged 25 to 49 (-0.7 points).

Given the marked improvement in youth employment in Q3 2020, the share of people aged 15 to 29 who are neither in employment nor in training (NEET) declined by 3.1 points to 13.4%, after a 3.6 points increase in the previous quarter. Nevertheless it stood 0.6 points above its pre-crisis level.

Compared to the first estimate published on 13 August 2020, ILO unemployment rate in Q2 2020 was unchanged, at 7.1 %.