France: Economic policies needed to increase the employment rate – Natixis

Patrick Artus, Research Analyst at Natixis, suggests that a rise in the employment rate is at the core of the economic policies currently being conducted by the French government.

Key Quotes

“A higher employment rate would make it possible to lower the fiscal deficit without having to reduce public spending, and would reduce income inequality (before redistribution).”

“We see that the overall employment rate in France is negatively affected mainly by:

• The weak labour force skills;
• The high level of companies’ social contributions,

which gives a clear idea of the economic policies that should be conducted, and which are being implemented in France.”

“But we should also take a more detailed look at the employment rate in France by:

• Age bracket;
• Skill level.”

“We then see that France’s disadvantage compared with other countries is concentrated on:

• All age brackets, but more on young people and over 55-year olds;
• Persons with a primary or secondary education.

This shows that the overall policies (increasing labour force skills, reducing companies’ social contributions) should be completed by more targeted policies: education system efficiency, retirement age.”

“But the level of labour force skills and the weight of social contributions have a negative impact on the employment rate of all labour force categories whose employment rate is low in France. These are the two variables that should receive priority attention.”