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France-2015-main-findings-growth-and-jobs
This document summarizes an OECD report on the French economy. It finds that while well-being is high in France, per capita growth has been weak for some time and unemployment remains high, especially among youth. It recommends that France speed up structural reforms to improve growth prospects, lower public spending substantially in the medium term to reduce taxes, reform the inflexible labor market, and strengthen vocational education. Fully implementing ambitious structural reforms across these areas could boost France's GDP by up to 4% by 2025.
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France-2015-main-findings-growth-and-jobs
- 1. www.oecd.org/economy/surveys/economic-survey-france.htm OECD OECD Economics 2015 OECDECONOMIC SURVEY OF FRANCE Growth and jobs Paris, 2 April 2015
- 2.
- 3. 3 Well-being is high http://dx.doi.org/10.1787/888933192276 Source: OECD (2014), OECD Better Life Index , www.oecdbetterlifeindex.org. Better life index, 2014 Index scale of 0 to 10, from lowest to highest level of life quality 0 1 2 3 4 5 6 7 8 9 10 Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skillsSocial connections Civic engagement and governance Environmental quality Personal security Subjective well-being France OECD
- 4. Income inequality ismoderate 4http://dx.doi.org/10.1787/888933192276 1. Latest available year. Source: OECD, Income Distribution and Poverty Database. 0 5 10 15 20 25 30 35 40 45 0 5 10 15 20 25 30 35 40 45 NOR DNK CZE FIN BEL SWE NLD AUT DEU IRL POL FRA KOR CAN ITA NZL AUS GRC PRT ESP GBR USA Gini index after taxes and transfers, per cent¹
- 5. But per capitagrowth has been weak for some time (I) 5http://dx.doi.org/10.1787/888933192276 Source : OECD, National Accounts and Economic Outlook 96 Databases . 0 1 2 3 4 5 0 1 2 3 4 5 ITA FRA GRC DNK PRT BEL FIN ESP CAN DEU NLD USA AUT NZL SWE CZE NOR GBR AUS IRL POL KOR Annualised real per capita GDP growth, 1990-2014% %
- 6. But per capitagrowth has been weak for some time (II) 6 Source : OECD, National Accounts and Economic Outlook 96 Databases . -5 -4 -3 -2 -1 0 1 2 3 4 5 1990 1994 1998 2002 2006 2010 2014 France OECD Annual % change 90 100 110 120 130 140 1990 1994 1998 2002 2006 2010 2014 France OECD Index, 1990=100 Real per capita GDP growth
- 7. And unemployment isstill high, especially for youths 7 Source: INSEE. 0 4 8 12 16 20 24 28 0 4 8 12 16 20 24 28 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Unemployment rate Total Youths (15-24) As a percentage of the labour force As a percentage of the labour force http://dx.doi.org/10.1787/888933192282
- 8. Main findings 8 o Boostingmedium-term growth will require continuing and deepening structural reforms. o High public spending has led to high taxes, including on labour. o The labour market remains inflexible. o The low-skilled and unemployed lack training opportunities. o Weak competition, notably in some services sectors, hurts growth.
- 9. Key recommendations 9 o Implementadditional structural reforms to improve the outlook for growth. o Make targeted reductions in public spending to cut taxes in the medium term. o Redouble efforts to reduce complexity, notably of the labour code and lay-off procedures. o Improve the quality of vocational education, concentrating it on the neediest. o Move faster to eliminate economic rents and privileges to boost employment, equity and competition.
- 10.
- 11. Activity continues tostagnate 11 http://dx.doi.org/10.1787/888933192282 Source: OECD, Economic Outlook 96 Database (and updates). -8 -6 -4 -2 0 2 4 6 8 -8 -6 -4 -2 0 2 4 6 8 2008 2009 2010 2011 2012 2013 2014 Real GDP growth Year-on-year percentage change France Germany United Kingdom United States
- 12. Business investment isweak 12 http://dx.doi.org/10.1787/888933192282 Source: OECD, Economic Outlook 96 Database (and updates) . -20 -15 -10 -5 0 5 10 15 -20 -15 -10 -5 0 5 10 15 2008 2009 2010 2011 2012 2013 2014 Business investment Year-on-year percentage change, volume France Germany United States
- 13. Export performance hasnot improved 13 1. Difference between export growth and export market growth, in volume terms. Source: OECD, Economic Outlook 96 Database (and updates) . -4 -3 -2 -1 0 1 2 3 90 100 110 120 130 140 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Export market shares and the current account balance Export performance¹ (left axis) Current account balance (right axis) Index 2010=100 As a percentage of GDP http://dx.doi.org/10.1787/888933192282
- 14. Public debt isstill rising 14 http://dx.doi.org/10.1787/888933192324 1 Source: OECD, Economic Outlook 96 Database (and updates) . 20 30 40 50 60 70 80 90 100 0 1 2 3 4 5 6 7 8 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Public deficit and debt, 1990-2014 As a percentage of GDP General government deficit (left axis) General government debt, Maastricht definition (right axis)
- 15. 15 To address thesechallenges, speed up the pursuit and implementation of ambitious structural reforms
- 16. Full implementation ofstructural reforms will pay off 16Source : OECD (2014), France, Les réformes structurelles : impact sur la croissance et options pour l'avenir, OECD Publishing. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2020 2025 Impact of major structural reforms engaged between 2012 and October 2014 Impact on GDP (%) Reforms engaged Reforms announced
- 17. Make green growtha priority 17 http://dx.doi.org/10.1787/888933192487 Raise environmental taxes, notably on diesel, to reduce pollution Source : OECD, Environmental Taxation Database. 1. 2011 for Belgium, Greece and the Netherlands; environmental taxes cover taxes on energy products (including electricity, petrol, diesel and other fossil fuels), automotive vehicles, transportation, waste management, substances that deplete the ozone layer, and other environment-related taxes. 0 1 2 3 4 5 0 1 2 3 4 5 USA CAN OECD ESP SVK FRA CHE POL BEL DEU PRT IRL GBR SWE AUT EST GRC CZE HUN ITA FIN NLD DNK SVN Environment-related tax revenues, 2012¹ As a percentage of GDP
- 18. Lower public spendingsubstantially in the medium term
- 19. Focus budgetary consolidationon public spending 19 http://dx.doi.org/10.1787/888933192332 Source: OECD, Economic Outlook 96 Database . 0 10 20 30 40 50 60 0 10 20 30 40 50 60 KOR CHE AUS IRL USA EST CAN SVK ISR POL CZE NZL JPN ESP GBR LUX DEU ISL NLD NOR GRC SVN EU15 HUN PRT AUT ITA BEL SWE DNK FRA FIN Government spending 2014, as a percentage of GDP
- 20. High spending meanshigh taxes 20 http://dx.doi.org/10.1787/888933192342 Source: OECD, Revenue Statistics Database. 30 35 40 45 50 55 30 35 40 45 50 55 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Trends in tax revenues As a percentage of GDP France Germany Sweden Canada
- 21. The share ofpublic employment is high 21 Ensure the number of civil servants matches underlying needs Reform the job mobility rules for public employees http://dx.doi.org/10.1787/888933192332 C JP G M N K D N A P A C Source: OECD, Economic Outlook 96 Database. 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 CHE JPN GRC MEX NLD KOR DEU NZL AUS PRT AUT CZE IRL TUR ITA USA SVK POL LUX ESP GBR EU15 SVN BEL CAN HUN FRA EST ISL FIN SWE DNK NOR Share of government employment 2014, as a percentageof total employment
- 22. Better control localgovernment operating spending 22 Reduce the number of local governments and strengthen the role of “intercommunalités” Rationalise the allocation of responsibilities among all levels of public administration Eliminate all “general competence” clauses http://dx.doi.org/10.1787/888933192332 Source: INSEE. 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Local government spending As a percentage of GDP Operating spending Investment spending
- 23. Better control socialspending (I) 23 http://dx.doi.org/10.1787/888933192363 Source: OECD, Social Expenditure Database. 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 MEX CHL KOR TUR ISR EST ISL CAN SVK AUS USA CHE CZE POL NZL IRL OECD GBR NOR HUN JPN LUX SVN GRC NLD PRT DEU ESP SWE AUT ITA DNK BEL FIN FRA Government social spending 2014, as a percentage of GDP
- 24. Better control socialspending (II) Hold down health-care spending: Close small, under-utilised public hospitals, Continue making greater use of ambulatory surgery and generic drugs, Encourage doctors more to limit their prescriptions. Ensure that public pensions play their part in reducing public spending as a share of GDP: Modify the parameters of complementary pension schemes, Narrow further the specific features of special pension regimes. Modify the parameters of unemployment benefits: Plan to reduce their maximum duration when growth picks up, Tighten their conditionality on effective job search or training. 24
- 25. Reform the labourmarket
- 26. Restrain labour marketduality 26http://dx.doi.org/10.1787/888933192402 Simplify and shorten layoff procedures, for example by reforming the labour courts Improve training and guidance (see below) Source: OECD (2014), Labour Force Statistics Database. 0 10 20 30 40 50 60 70 80 AUS GBR DNK NOR OECD JPN GRC CZE CAN BEL IRL AUT FIN ITA DEU NLD SWE FRA PRT ESP POL SVN B. Youths (15-24) 0 5 10 15 20 25 30 AUS GBR BEL NOR DNK AUT CZE GRC IRL OECD ITA CAN DEU JPN FIN SVN FRA SWE NLD PRT ESP POL A. Total Share of employment under fixed-term contracts As a percentage of total dependent employment, 2013
- 27. Lower further thetax wedge and the overall cost of labour 27 http://dx.doi.org/10.1787/888933192393 Shrink the tax wedge in line with public spending cuts Avoid any discretionary increase in the minimum wage Source : OECD, Taxing Wages 2014 . 1. Including employer contributions. The measures of the fiscal and social wedge are computed by assuming that the CICE tax credit would ease the same wedge by 4% of the gross salary, for wages lower than 2.5 times the minimum wage (SMIC). 0 10 20 30 40 50 60 0 10 20 30 40 50 60 IRL CAN USA GBR OECD NLD DNK EST ESP SVK PRT GRC SVN SWE FIN ITA FRA AUT DEU BEL The tax wedge, 2013 Assessed at 100% of average wage, as a % of total remuneration for work¹
- 28. Strengthen vocational educationand training for those who need it most 28 Implement a system of quality assurance Ensure that the regions have the capacity and funding needed to guide candidates Clarify the responsibilities of the parties involved and align them with control over funds http://dx.doi.org/10.1787/888933192492 Source : OECD (2013), Skills Outlook 2013 Database. 0 10 20 30 40 50 60 0 10 20 30 40 50 60 Low Medium High Low Medium High Adults' proficiency, 2013 France OECD Numeracy Literacy % %
- 29. Develop apprenticeships asfrom high school 29 http://dx.doi.org/10.1787/888933192439 Attract highly qualified teachers Give them credit for professional experience outside of teaching Provide more individualised support for students in difficulty Ensure business mentors have pedagogical training Source: Ministry of National Education, DEPP. 0 50 100 150 200 250 300 350 400 450 0 50 100 150 200 250 300 350 400 450 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Number of apprentices by level of diploma, thousands Secondary education, short programmes Secondary education, long programmes Tertiary education
- 30.
- 31. Continue to simplifythe business environment 31 Implement the measures proposed by the business simplification committee Charge an independent institution with the task of examining all regulations http://dx.doi.org/10.1787/888933192453 1. 2008 for the United States. Source: OECD (2013), Product Market Regulation Statistics. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 CAN NZL USA GBR AUS DEU DNK JPN CHL FIN NLD NOR IRL CHE SWE ITA EST SVK ISR ESP AUT CZE ISL KOR GRC PRT FRA SVN BEL HUN Administrative barriers to starting up corporations, 2013¹ From most (0) to least (6) favourable to competition
- 32. Further reduce barriersto competition in retail trade 32 Simplify approval procedures to open large stores End restrictions on loss- leader selling and the dates of discount sales Liberalise shop opening hours while guaranteeing negotiated offsets http://dx.doi.org/10.1787/888933192748 1. 2008 for the United States. Source : OECD (2013), Product Market Regulation Statistics . 0 1 2 3 4 5 6 0 1 2 3 4 5 6 SWE SVN KOR NZL NLD CHL CHE AUS ISL EST IRL CZE DNK GBR PRT NOR HUN SVK JPN AUT CAN GRC FRA DEU FIN ESP ITA ISR BEL Regulations in the retail trade sector Index scale from 0 to 6, from least to most restrictive 2013¹ 1998
- 33. Continue to openregulated professions to competition 33 http://dx.doi.org/10.1787/888933192463 Limit the activities over which they have an exclusive right End regulated prices in potentially competitive sectors Gradually relax quotas 1. 2008 for the United States. Source: OECD (2013), Product Market Regulation Statistics. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 SWE FIN CHE CHL DNK GBR AUS NOR USA NZL IRL NLD ISL EST ITA ESP JPN SVK GRC AUT KOR CZE ISR SVN PRT DEU FRA BEL HUN CAN Regulation of architectural, accounting and legal services, 2013¹ Index scale from 0 to 6, from least to most restrictive Codes of conduct Barriers to entry
- 34. More information… www.oecd.org/economy/surveys/economic-survey-france.htm OECD OECD Economics 34 Disclaimers: Thestatistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.