French business leaders are hit hard by unemployment. In the first half of 2023, 36.6% of them had to put the key under the mat, victims of the difficult economic situation that the French economy is experiencing. The picture becomes even bleaker when you take into account the bankruptcies of small businesses in the hotel and restaurant sector. In fact, 65% of the former owners of this type of business are now unemployed.
Entrepreneurs out of work and out of resources
France now has 2.2 million unemployed, according to INSEE. And the number of former business leaders skyrocketed in the first half of 2023.
These other types of unemployed are generally missing from the statistics and do not benefit from social security services to take care of their needs if they lose their jobs. Thus, they find themselves without income and prospects, although they are on average 46 years old and often have a dependent family. A study by Altares and GSC (Business Leadership Social Security) shows that 36.6% “little bosses” filed for bankruptcy in the first half of 2023. In the hotel and restaurant sector, this figure rises to 65.6%.
The industry has not escaped this phenomenon either: in the first half of 2023, 58.9% of bankruptcies were declared. Equally impressive figures are in the construction sector (50% bankruptcies) and trade, where 47.2% of entrepreneurs were forced to stop their activities. In Corsica, a particularly alarming situation is observed: the number of defaulting bosses reaches 100%.
Difficult economic situation
90% of failed bosses owned small businesses. On average, they employed no more than 5 people, and the turnover reached less than 500,000 euros per year. The owners of restaurants, hair salons and e-commerce businesses have been hardest hit in the first half of 2023.
Most of these companies have become victims of inflation. Prices for energy, transport and even raw materials have been steadily rising since the Covid-19 pandemic. They crushed many businesses under the weight of ever-growing bills. The drop in household demand was not enough to offset the impact of these fees, which are also steadily rising.
It should be noted that a significant number of these companies have taken advantage of government-guaranteed loans (PGE) to cope with the economic impact of the health crisis. These companies then found themselves unable to repay those loans and had no choice but to file for bankruptcy.