GE Can’t Find French Workers as Skill Gap Means 10% Unemployment

Clara Gaymard, the head of General Electric Co.’s French unit, has been looking in vain for workers for a factory that makes valves for the oil and nuclear industries in Conde-sur-Noireau in western France.

“The plant has 360 employees, 100 of whom will retire in the next four to five years, and we can’t find welders and cutters to replace them,” she said in an interview.

GE’s experience helps tell the tale of what ails the French labor market. While jobless claims rose to a 2.92 million at the end of May, the highest in more than 12 years, a survey released by the country’s employment body showed at the same time that between half and two-thirds of French companies are unable to recruit the engineers, cooks and other employees they need.

The mismatch of skills and available jobs has left 10 percent of the working-age population without employment, posing one of the biggest challenges for the government of President Francois Hollande. It reflects France’s inability to adapt its educational and vocational training systems to business needs, like neighboring Germany has done.

“Without delay, France must improve its vocational training system to more efficiently meet job offers,” Hollande said at a “social summit” in Paris on July 9.

The employment rate of French youth in 2011 was 29.9 percent, compared with Germany’s 48 percent and below the 39.3 percent average for countries in the Organization for Economic Cooperation and Development, according to a report by the Paris- based group. The youth unemployment rate in France was 22 percent, more than double Germany’s 8.6 percent.

Elitist Education

The French education system looks down on vocational training, perpetuating the notion that intellectual jobs are more worthy than manual work, said Jerome Frantz, chairman of the French Federation of Mechanical Industries, which represents companies that make parts for everything from machine tools to trains and wind turbines.

“For years, there has been a deep hatred in the education system regarding manufacturing, which was ideological,” he said.

The result: GE’s Gaymard can’t find the workers she needs.

“People don’t want to work in manufacturing anymore, as they’ve been told for a decade that industry is dead and that plants were going to China,” Gaymard said during the June 13 interview in Paris.

Frantz’s federation started an advertising campaign last month to lure jobseekers to manufacturing. The body is seeking about 40,000 people a year over the next five years to replace retiring workers and expand.

Jobs Available

“We’re grooming 25,000 people per year in our training programs, so we have a gap of 15,000,” Frantz said at a press conference in Paris on June 26.

The shortfall comes even as French industrial payrolls shrank by more than 800,000 in the past 10 years to 3.29 million amid an economic slump, according to Insee, the national statistics office.

In the first quarter, jobs in the construction industry rose by about 5,800 to 1.45 million after falling for three years, and services payrolls gained 18,800 to 11.4 million.

Sodexo, the world’s second-biggest provider of catering services, including to groups such as U.S. marines in Iraq, has said it wants to hire 5,000 people this year, from cooks and handymen to technicians.

Eiffage SA (FGR), France’s third-largest builder plans to hire more than 3,800 people this year to replace retirees. The company’s CEO, Pierre Berger, said the task isn’t easy.

Minimal Mobility

“We’re struggling to find skilled and thorough workers, team leaders and engineers,” he said in an interview on June 25. Finding people willing to work with their hands has become exceedingly difficult, Berger said.

“Working in construction isn’t viewed as modern,” he said. “Working with one's hands in this country isn’t recognized except in luxury goods and for arty Parisian craftsmen.”

The inability of companies to hire skilled workers thrown out of jobs by the contracting industrial base stems partly from the lack of mobility among factory hands, said Marc Ferracci, a professor at the Paris-Est Marne-la-Vallee University, who co- authored a report last year on vocational training for research center Institut Montaigne.

“French employees are rarely willing to move, compared with the U.S. and the U.K., because the French housing market lacks fluidity,” he said in an interview.

Hiring Difficulties

About 43 percent of companies in the national employment body’s survey of about 410,000 said they face hiring difficulties, up 5 percentage points from a year earlier. The report was conducted in the fourth quarter of 2011 and published in May.

The shortfall for home nursing and cleaning jobs was the highest at 67 percent; it was 62 percent for engineers, 61 percent for cooks, and 58 percent for hospital nurses.

Unlike in Germany, coordination in France between vocational training and employers is minimal, said Ferracci.

“In Germany, not only do vocational training firms have an obligation to provide details on their job placements, but trainers’ pay is partly dependant on how many trainees find a job at the end of their session, which forces them to build classes around well-identified needs,” Ferracci said.

While France spends a bigger piece of its national income on education than Germany -- 6 percent compared with 4.8 percent, according to OECD figures -- it gets less bang for its buck, he said.

In-House Training

Pole Emploi, the French national employment agency, needs to improve its statistics on companies’ requirements by jobs and areas, Ferracci said. The agency needs to focus on unskilled labor, as is done elsewhere in Europe, he said. Universities also should publish their placement records, like it’s done in the U.K. and Scandinavia, he said.

“Once you allow students in France to know the placement rate and even the wages stemming from different higher-education courses, I can ensure you that the system will regulate itself,” Ferracci said.

Companies are now starting to train unskilled workers in- house because of the shortage of skilled labor. Eiffage signs up 400 to 500 youths a year on the minimum wage to train them.

GE “had to fight to get a training center” to groom workers for its plant in western France, which makes nacelles for jet engines, as it couldn’t find skilled workers, Gaymard said.

Sapin’s Acknowledgement

Labor Minister Michel Sapin acknowledges that the country’s education system and training aren’t nimble enough to adapt to the demands of the jobs market.

“There’s a problem with advising and training youth,” Sapin said in a June 19 interview while he was attending the Group of 20 summit in Mexico. “We must reinforce all programs, especially apprenticeships.”

GE’s Gaymard concurs.

“The two pillars that definitively need to be reformed are the ability to react quickly to adjust to the world and demand, whether up or down, and the ability for life-long training of employees so that they can adapt.” she said.

To contact the reporter on this story: Francois De Beaupuy in Paris at fdebeaupuy@bloomberg.net.

To contact the editor responsible for this story: Vidya Root in Paris at vroot@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net

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