France: What surging apprentice figures mean

Generous subsidies to apprenticeships introduced in 2020 have pushed up French employment numbers and will continue to if the policy is maintained. The key is to improve the efficiency of the scheme, which would enhance France’s public debt sustainability and its growth potential. Simply cutting the current subsidies for budgetary reasons would lower output levels without improving the country’s long-term debt dynamics.

What you will learn:

• The high cost of the apprenticeship scheme is at risk of being cut back to cap public spending. Should the extra subsidies introduced in 2020 be eliminated, the limited initial budgetary savings would be overridden by the negative impact on growth. With output levels in 2050 1.4% lower than in our baseline, the public debt-to-GDP ratio would be slightly higher.
• Who will become Senegal’s fifth president?Were the efficiency of the scheme improved, for instance with subsidy provision conditioned on household income or by increasing awareness of disadvantaged individuals, more targeted help would alleviate the burden on public finances whilst enhancing France’s growth potential. This would imply a positive impact on government debt as a share of GDP.
• Despite the negative impact on aggregate labour productivity showing in the statistics, the scheme may help bridge the gap between school and employment, a dimension on which France struggles. Plus, the enhanced labour market participation amongst young cohorts can assuage issues stemming from the low retirement age, although it will be no panacea.