You're correct that, according to standard economic theory (Okun's Law), a decrease in real GDP during a recession should typically lead to a rise in the unemployment rate. However, France's unemployment rate did not increase significantly during the 2020 recession despite a sharp decline in GDP. Several factors could explain this phenomenon:
1. Government Support Measures
- Job Retention Schemes (Chômage Partiel): France implemented a strong furlough scheme where the government subsidized wages to prevent layoffs. Many employees remained officially employed even though they were not actively working.
- Business Aid and Subsidies: Direct financial aid to businesses helped them cover fixed costs, reducing the need for layoffs.
2. Temporary Labor Market Adjustments
- Reduction in Working Hours Instead of Layoffs: Instead of cutting jobs, many businesses reduced working hours, which helped maintain employment levels.
- Impact on Temporary and Informal Workers: Many job losses might have occurred in temporary contracts or informal employment, which are not always reflected in official unemployment statistics.
3. Statistical and Definition Factors
- Unemployment Definition (ILO Standard): To be classified as unemployed, a person must be actively looking for work. During the COVID-19 lockdowns, job searching became difficult, and many people were classified as inactive rather than unemployed.
- Labor Force Participation Decline: Many people, especially those in sectors heavily affected by the pandemic (e.g., tourism, hospitality), exited the labor force temporarily.
4. Sectoral Differences
- Public Sector Stability: Many public sector jobs were unaffected by the recession, providing a stabilizing effect on employment figures.
- Resilience in Some Sectors: While tourism and hospitality suffered, other sectors (e.g., tech, healthcare, logistics) maintained employment or even saw increased demand.
5. Delayed Unemployment Effects
- Some layoffs and bankruptcies may have been postponed due to government aid. If support measures had been removed suddenly, unemployment could have risen more significantly later. In summary, France’s unemployment rate did not increase significantly in 2020 due to strong government intervention, temporary labor market adjustments, statistical effects, and sectoral employment stability. However, without these interventions, the unemployment rate would likely have followed the traditional economic pattern.