In a factory near the town of Cholet, some 50km from Nantes in the west of France, large blocks of clay are being shaped, dried out and finally fired in a kiln at 1,000 degrees centigrade. These terracotta building blocks are then shipped off to construction companies.
The factory’s owner, Bouyer Leroux, is the leading French manufacturer of terracotta building materials, and stands to benefit from the country’s tentative economic revival. However, there is one key dynamic that could put a brake on growth, despite a recovering economy and France’s reform-minded government: difficulties in recruiting. “The current situation for hiring both skilled and unskilled workers is difficult because there’s an imbalance between supply and demand,” said Bouyer Leroux’s chief executive Roland Besnard, wearing a hard hat and a high visibility vest over his navy-blue suit. Even in France, where unemployment is stuck at more than 9 per cent and among the highest in Europe, an increasing number of companies are complaining about the lack of skilled workers, according to Inséé, the country’s national statistical institute. This mismatch between companies’ needs and the skills available — a phenomenon in large parts of the eurozone — could crimp the region’s nascent economic recovery. This summer Bouyer Leroux, which employs 1,400 people in France and is increasing revenues at a rate of 10 per cent a year, had to increase its delivery time because of a dearth of maintenance workers for its production sites. Mr Besnard said: “Maintenance activities are not skewed to one industry so there is a competition for maintenance workers between industries because of the slight recovery.”
Mr Besnard echoes the sentiments expressed by many chief executives who are struggling to hire skilled and unskilled workers in France when he said “the main concern is the university system, the school system and a welfare system that’s too generous”. It is a concern that is shared by policymakers. France’s finance minister Bruno Le Maire told a group of journalists last month that the questions of skills is “the most important economic issue in France” today. He said: “We have a system of learning that does not provide the skills that are needed. And suddenly, you have falling unemployment.”
According to a report in July by the Bpifrance public investment bank, nine out of 10 mid-sized companies are facing recruitment difficulties. The main reason that they put forward for this is an inadequate level of qualification of the employee. “There is a paradoxical situation in the French labour market where on the one hand there is high unemployment but on the other hand, a large number of mid-sized companies say that their main difficult is hiring,” said Nicolas Bouzou, head of Asterès, an economic research centre. He said this is largely because of three reasons: a lack of trained people for the jobs that are open, a generous welfare system for unemployed people in France that does not always motivate them to look for a job and a lack of adequate housing where many of the jobs are located.
Cholet, which owes the rise of its prosperity to the settlement of weavers in the 17th century, is situated in the thriving Pays de la Loire region. Its unemployment rate of 5.7 per cent in the second quarter is far below the national level of 9.1 per cent and among the lowest in the country, thanks to its strong position in industries ranging from services to construction to agro-food. The skills shortage is particularly acute in digital, according to employers such as Matthieu Thibault, who is president of DSMI, an IT infrastructure company that is based near Nantes and employs about 70 people. “The challenge for my business is to keep growing,” he said. “The main difficulty is the recruitment and retention of qualified people in our IT field.”Bouyer Leroux’s Mr Besnard said that while companies have tried to reduce labour costs through automation.......

Questions 1. Why do skills shortages exist, even when unemployment is high?
2. What effects might a shortage have on the companies discussed in the case?
3. What can businesses do to address skills shortages?
4. How might businesses engage with schools, colleges and universities to influence the skills’ levels of graduates?