France, troubled for years by high unemployment, is now grappling with a lack of qualified workers. While it still has 3.5 million registered jobseekers, a growing number of positions lie unfilled because companies can’t find the right people.

Many company bosses are pinning their hopes on newly-elected President Emmanuel Macron, and specifically his labor reform plans, to help find willing and able workers.

One such employer is Philippe Girard, who heads the French subsidiary of British construction equipment maker JCB. Despite offering above market pay rates for entry level jobs, his firm has been unable to fill 50 posts for maintenance technicians in its dealership network for more than a year.

“It’s becoming a brake on our development because clients increasingly want maintenance service on construction sites and without technicians we can’t meet their needs,” he told Reuters.

Girard has also been looking in vain for six months for three sales executives at the JCB France headquarters in Sarcelles, a satellite town of Paris where unemployment is in double digits.

Critics of the current regulatory regime say rigid labor rules and poorly adapted training unnecessarily keep the unemployment rate close to 10 percent.

Macron hopes to fix the mismatch of supply and demand for workers by pouring billions of euros into training while simplifying the labor code.

The object is to make it easier for employers to hire but also to shed staff, should their business turn down in the future. To sweeten the pill, he also wants to expand unemployment benefits for people seeking a career change.

Similar but less ambitious measures to free up the labor market have in the past run into resistance in parliament, and provoked sometimes violent protests on the streets.

Undaunted, Macron has made the reforms his top priority, starting talks with trade unions last week. He is also seeking a majority for his party in legislative elections next month to strengthen his hand in pushing them through parliament.

Skills gap

Companies’ demand for workers is surging as the economy slowly picks up. Government employment agencies had received 274,000 unfilled job offers as of April, up 14 percent in a year and close to levels not seen since November 2011.

Demand for workers on longer-term contracts — which French firms often avoid, fearing they will be unable to get rid of staff in the future — is growing faster than for short-term hires. More than half of the offers received were for contracts of over six months.

Recruitment group Manpower found in a recent survey that nearly one in four French employers was struggling to find workers.

“We clearly have a skills gap between what our customers are looking for and people’s real skills,” Manpower France head Alain Roumilhac told Reuters.

With even relatively lowly-paid industrial workers usually needing to use digital technology, Manpower is investing millions and receives public subsidies to train workers up to meet employers’ expectations.

Eric Labaye, a senior partner at the McKinsey consultancy, said that while 90 percent of jobs require at least basic proficiency with digital technologies, 40 percent of the workforce did not have such elementary skills.

“Adapting the labor market and skills is clearly a priority. The primary focus should be on getting more people with the right skillset into growing sectors. Second is the development of these growing sectors themselves,” Labaye told Reuters.

One example is booming demand for data specialists. France employs fewer of them as a proportion of its workforce than any other OECD country except Turkey, despite a world-class reputation for higher mathematics, according to figures from the 35-nation organization.

Big money

Macron has said he wants to invest 15 billion euros ($16.8 billion) in building up skills for a million youths and another million low-qualified, long-term unemployed people.

France already spends nearly 32 billion euros a year on professional training, equivalent to 1.5 percent of economic output, but only 15 percent goes to training job seekers, according to data from the Labor Ministry.

“France puts a lot of money into the training system but it is very, very complex,” said OECD economist Nicola Brandt, who is preparing a report on France for the organization.

“More money is always better, but we have an issue of money not being used in the right way, basically not going to the people who need it most,” she said.

Extra money for training, as well as extending unemployment benefits to cover people who want to leave jobs for a new profession, could help make Macron’s reforms more palatable to critics.

Eager to push ahead on labor reform quickly, Macron launched talks with unions last week knowing he will have to overcome resistance to his plans to ease regulation.

Though it would help if he wins a parliamentary majority, labor reform is always a deeply sensitive issue in France, where high job security is cherished.

His Socialist predecessor, Francois Hollande, tried to introduce more working time flexibility and rein in labor tribunal challenges and payouts last year, leading to violent student protests in French cities.

Eventually Hollande’s government – in which Macron served as economy minister — invoked special powers to impose the reforms by decree due to a lack of support in parliament.

“Only one mistake could break everything. Macron is trying to be as clever as possible, especially with the unions because even if he has a majority in parliament he has a very narrow path to deploy the program,” Manpower’s Roumilhac says.

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