France experienced a very sharp rise in labour shortages in the early 2000s. Between 2003 and 2007, the proportion of occupations with more job offers than qualified applicants to fill them doubled, rising from 15 per cent to 30 per cent. To tackle these recruitment difficulties, which were concentrated in technical occupations, the French government introduced a decree in 2008 to facilitate the recruitment of non-European workers with the relevant qualifications. This note summarises the lessons to be learnt from the effects of this policy. The reform enabled employers to recruit more staff in the target occupations and increased the number of jobs filled. It therefore fulfilled its objective of reducing labour shortages. This led to a fall in wages within these trades, but this fall affected foreign nationals far more than French employees. Firms that were previously constrained by labour shortages in these occupations have grown in size and increased their turnover, but do not appear to have increased either their productivity or their level of capital investment. The effects on aggregate growth in the sector and the commuting zone were positive but short-lived, which raises the question of what measures should be implemented to ensure these benefits are sustained.
Skilled immigration: a solution to labour shortages?
Cette note effectue l’évaluation de l’efficacité du décret introduit en 2008, qui vise à simplifier le recrutement de travailleurs étrangers pour une liste d’occupations en situation de tension, ainsi que les éventuels coûts incombant aux travailleurs résidents face à une augmentation de la concurrence sur le marché du travail
Reference IPP Policy Brief No. 63
Presentation
Key Results
- The recruitment of foreign workers in target occupations has risen by more than 50 per cent as a result of the reform, whilst the recruitment of French workers has remained unchanged, and total employment in these occupations has increased by around 1.4 per cent.
- The average wage for foreign workers in the target occupations fell by 3.3 per cent, whilst the average wage for French workers in the same occupations remained unchanged. The starting wage for foreign workers fell by 14 per cent and that for French workers by 7 per cent.
- On average, firms affected by the reform saw their size increase by around 1.4 per cent, whilst their turnover and value added rose by 1.3 per cent. There was no significant effect on productivity or capital investment.
Sara Signorelli
Partners
This study received financial support from the Labour Chair at PSE – Paris School of Economics, and benefited from government funding administered by the French National Research Agency (ANR) under the ‘Investissements d’avenir’ programme, reference ANR-10-EQPX-17 (Secure Data Access Centre – CASD).