Économie et Statistique n° 376-377 - The shorter working week
The slowdown in labour productivity in the 1990s: the impact of the employment policies
Labour productivity fell in France in the early 1990s. The annual growth rate in productivity per employee in the non-agricultural market sector fell from 2% per year over the 1982-1992 period to 0.7% over the 1993-2002 period. This slowdown was reflected by an apparent employment upturn of 1,600,000 people from 1993 to 2002, centred mainly in the service sectors. Many papers based on micro- and macroeconomic data have been published on this subject, although none have been able to claim to give an entirely satisfactory explanation of the phenomenon. The drop in labour productivity gains in France is analysed here based on quarterly macroeconomic data for the non-agricultural market sector. An employment equation is estimated with a focus on long-term determinants. A number of variables can explain the drop in productivity gains: the change in working hours, the cost of labour and the relative cost of inputs capital and skilled and unskilled labour and the proportion of part-time workers in employment. The equations are estimated for the entire non-agricultural market sector and then separately for the manufacturing and non-manufacturing sectors to take into account the strong employment growth in services. The shorter working week and reduction in the relative cost of unskilled labour compared with skilled labour both contributed to the downturn in labour productivity gains, which were probably accompanied by a slowdown in underlying productivity.