2019 OECD ECONOMIC SURVEY OF FRANCE Towards more inclusive growth and employment Paris, 9 April 2019
http://www.oecd.org/eco/surveys/france-economic-snapshot
@OECDeconomy @OCDE
Main themes
France’s assets and reform agenda
Growth is resilient, but insufficient Key long-term challenges Labour market performance and implementation of the OECD Jobs Strategy Efficiency of public investment 2
France’s assets and reform agenda
3
France’s productivity is high GDP per hour worked, level Current USD PPPs, 2017
NOR
BEL
DNK
AUT
DEU
USA
NLD
CHE
SWE
0
FRA
0
FIN
10 ISL
10 EA19
20
GBR
20
AUS
30
ITA
30
ESP
40
OECD
40
CAN
50
JPN
50
SVK
60
NZL
60
CZE
70
PRT
70
GRC
80
POL
80
KOR
90
HUN
90
Source: OECD (2019), OECD Productivity Statistics (database). 4
Health-adjusted life expectancy is high Years, 2016ยน
1. Average number of years that a new-born infant can expect to live in full health. 2. Euro area member countries that are also members of the OECD (17 countries). Source: WHO (2019), Global Health Observatory data repository , World Health Organisation, Geneva.
5
The ongoing reform agenda is ambitious Potential impact of some ongoing reforms GDP per capita after 10 years (%) GDP per capita
2017-18 labour market reforms - Higher targeted spending on lifelong learning, increased flexibility of employment protection, lower administrative extension of branch-level agreements. Tax measures - Reduced tax wedge, reduction of capital income taxation, steady increase in in-work benefits.
1.4
Product market and simplification measures
0.4
- Simplification of bankruptcy procedures, smoothing of firm-size related thresholds and incentives for employee-participation schemes. Total
3.2
1.4
Source : OECD Staff calculations and De Williencourt, C, Faci, A. et S. Ray (2018), « Quel effet macroéconomique du PACTE ? Premiers éléments de réponse », Trésor-Eco, No. 226.
6
Reforms will benefit lower- and middleincome households Illustrative increases in disposable income over the long term By income groups, % 9
9 8
Tax measures Total effects
Product market and simplification measures² 2017-18 labour market reforms
8
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
The poor
Lower middle-class
Mean
Upper middle class
The rich
Source: OECD Staff calculations and De Williencourt, C, Faci, A. et S. Ray (2018), « Quel effet macroéconomique du PACTE ? Premiers éléments de réponse », Trésor-Eco, No. 226.
-1
7
Growth is resilient, but insufficient to significantly improve living standards
8
Economic growth is resilient Real GDP growth, annual growth (%) 6
6 FRANCE
Euro areaยน
United States
4
4
2
2
0
0
-2
-2
-4
-4
-6
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1. Euro area member countries that are also members of the OECD (17 countries). Source: OECD (2019), OECD Economic Outlook: Statistics and Projections (database) and updates.
2018
2019
2020
-6
9
The rise in living standards is lagging behind that in the euro area Real GDP per capitaยน Index, 2001-Q1=100 125
125
120
FRANCE
Germany
Euro area (19 countries)
United States
120
115
115
110
110
105
105
100
100
95
2001
2003
2005
2007
2009
2011
2013
2015
2017
95
1. At constant 2010 USD PPPs. Source: OECD (2019), OECD National Accounts Statistics (database).
10
Growth in disposable income has stagnated Disposable income of French householdsš Index, 2001-Q1=100 130
130
Disposable income
Disposable income adjusted by household composition
125
125
120
120
115
115
110
110
105
105
100
100
95
2001
2003
2005
2007
2009
2011
2013
2015
2017
1. Changes in household incomes, after taxes and social contributions, and deflated by the consumer price index. Household composition takes into account consumption units (number of adults, number of children and their age). Source: INSEE (2019), Pouvoir d'achat et ratios des comptes des mĂŠnages.
95
11
Public debt has not decreased Public debtยน % of GDP 140
FRANCE
Germany
Euro areaยน
Portugal
140
130
130
120
120
110
110
100
100
90
90
80
80
70
70
60
60
50
2001
2003
2005
2007
2009
2011
2013
2015
2017
1. According to Maastricht definition. Euro area member countries that are also members of the OECD (17 countries). Source: OECD (2019), OECD Economic Outlook: Statistics and Projections (database) and updates.
50
12
Operating expenditures are high Operating expenditures1 In percent of GDP, 2017
1.
FRA
FIN
BEL
DNK
NOR
AUT
ITA
DEU
PRT
HUN
LUX
NLD
SVN
OECD
ESP
ISL
0
POL
0
SVK
10
CZE
10
EST
20
CAN
20
JPN
30
LVA
30
AUS
40
NZL
40
USA
50
LTU
50
KOR
60
IRL
60
Total spending excluding interest payments and public investment.
OECD (2019), OECD Economic Outlook: Statistics and Projections (database) and updates.
13
Pension spending is high Public spending on pension, 2016 Percent of GDP
Source: European Commission (2018), "The 2018 Ageing Report”, Brussels.
GRC
ITA
FRA
AUT
PRT
FIN
EA19
0
ESP
0
BEL
2 EU28
2 POL
4
SVN
4
NOR
6
DEU
6
DNK
8
HUN
8
LUX
10
SVK
10
CZE
12
SWE
12
EST
14
GBR
14
LVA
16
NLD
16
LTU
18
IRL
18
14
Main recommendations to reduce public spending and taxes As part of the “Action Publique 2022” programme, announce precise targets for reducing public expenditures in spending reviews. Systematically review tax expenditures after some years of implementation and phase them out if not deemed helpful. Review pension penalties and bonuses to encourage an increase in the effective retirement age and gradual retirement.
15
Key long-term challenges for productivity and inclusiveness
16
Well-being indicators are mixed Country rankings, 2017 from 1 (best) to 35 (worse)ยน 60% middle performers
20% bottom performers
France
20% top performers
3
13
15
15
18
Work-lif e balance
Civic engagement
Housing
Income and Health status wealth
19
21
22
Personal Environmental Jobs and earnings qualit y security
23
24
26
Subje ctive Educatio n and Social connections skills well-being
1. Each well-being dimension is measured by one to four indicators from the OECD Better Life Index set. Normalised indicators are averaged with equal weights. Source : OECD (2017), Better life index, www.oecdbetterlifeindex.org.
17
Productivity gains are limited GDP per hour worked Average annual % growth rateยน, 1997-2017
1. At constant 2010 USD PPPs. Source : OECD (2018), OECD Productivity Statistics (database).
KOR
POL
SVK
CZE
HUN
ISL
OECD
EA19
USA
0.0
SWE
0.0
FIN
0.5
AUT
0.5
AUS
1.0
JPN
1.0
CAN
1.5
DEU
1.5
GBR
2.0
NLD
2.0
FRA
2.5
DNK
2.5
PRT
3.0
CHE
3.0
NZL
3.5
NOR
3.5
BEL
4.0
ESP
4.0
GRC
4.5
ITA
4.5
18
Poverty is low thanks to social transfers… Poverty rate % of the population aged 18-65, 20161 Poverty rate after taxes and transfers
Poverty rate before taxes and transfers
1. At 50% of households’ median equivalised income. 2016 or latest year available. 2. Euro area member countries that are also members of the OECD (17 countries). Source: OECD (2019), OECD Income Distribution and Poverty Statistics (database).
USA
JPN
ESP
GRC
KOR
ITA
PRT
CAN
AUS
OECD
EA²
GBR
NZL
POL
HUN
0
DEU
0
AUT
5
BEL
5
CHE
10
SWE
10
SVK
15
NLD
15
FRA
20
NOR
20
FIN
25
CZE
25
DNK
30
ISL
30
19
… but intergenerational mobility is weak Number of generations to reach mean income1
HUN
FRA
DEU
ITA
PRT
AUT
GBR
USA
KOR
0
CHE
0
EA¹
1
OECD¹
1
GRC
2
ESP
2
BEL
3
JPN
3
NLD
4
AUS
4
CAN
5
NZL
5
FIN
6
SWE
6
NOR
7
DNK
7
1. Expected number of generations it would take the offspring from a family at the bottom 10% to reach the mean income in society. Available countries for the OECD average and euro area member countries that are also members of the OECD. Source : OCDE (2018), A Broken Social Elevator? How to Promote Social Mobility.
20
Main recommendations to enhance well-being and productivity Continue reforms by minimising and/or offsetting their potential shortterm negative effects on selected population groups
Fostering greener growth Increase environmental taxes and develop flanking measures for the most affected populations over the short term. Strengthen the risk assessment of phytosanitary products.
Fostering greener growth Engage an independent institution to conduct a thorough review of all existing and proposed regulations affecting firms. Lower transaction costs on housing, notably real estate transfer taxes. 21
Fostering an inclusive development of skills and employment Implementing the OECD Jobs Strategy
22
Progress in the labour market remains limited Employment and unemployment rates % of the population
% of the labour force
64
12 Employment rate, 15-74 year-olds (left axis)
Unemployment rate (right axis)
62
10
60
8
58 6 56 4
54
2
52 50
1998
2002
2006
2010
2014
2018
0
Source: OCDE (2019), OECD Economic Outlook: Statistics and Projections (database) and updates. 23
Significant reforms have been undertaken
24
Labour cost at the minimum wage has decreased Labour cost at the minimum wage % of the median’s labour cost, 2018¹
1. Including the amount of the CICE tax credit; estimates based on a household of one single person with no children. 2. The 2019 estimates for France factor in the reforms of employers’ social security contributions which are taking place in 2019, but they do not take into account the planned increase in the minimum wage in 2019. Source : OECD (2019), OECD Staff calculations based on the OECD’s TaxBEN model.
25
Recent tax and benefit reforms will help low-income households Simulated effects of reforms on the net minimum hourly income USD-PPPs, 2018¹ 14
14
After reforms ² 12
12
Before reforms 10
10
8
8
6
6
4
4
2
2
0
HUN LVA SVK EST GRC POL PRT TUR CZE SVN ESP USA CAN DEU KOR JPN IRL GBR NZL FRA BEL AUS FRA LUX NLD
0
1. The simulations are based on a household comprising a single individual without children. 2. The reforms considered correspond to the 2018 and 2019 tax and benefit reforms: the cut in employee social security contributions; the reform of the in-work benefits (Prime d’activité) (including measures that came into force on 1 January 2019 – further rises to the Prime d’activité to increase net household income by 90 euros at the level of the minimum wage-). The increase in the minimum wage in 2019 is not considered. Data before reforms include the CICE.
Source : OCDE (2019), OECD Staff calculations using the OECD TaxBEN model.
26
Difficulties of dismissals for permanent contracts have decreased Strictness of protection for permanent contracts, difficulty of individual dismissals Indicator scale from 0 (least restrictive) to 6 (most restrictive), 2013 et 20181,2
1. Provisional estimates for 2018. 2. Rigidity of employment of employment protection for permanent contracts, sub-indicator of individual dismissals. The assessed difficulties are: procedural inconveniences for employers engaging in a dismissal process, notice periods and severance pay in the case of fair dismissal and the permissible grounds for dismissal and the repercussions for the employer if a dismissal is found to be unfair. Source : OECD (2019), OECD Staff calculations based on the OECD’s indicators of employment protection.
27
But structural weaknesses remain
28
Too many adults have weak skills As a % of the population aged between 16 and 65, with a PIAAC score lower than 2 60
60
Numeracy only
Literacy only
Literacy and numeracy
TUR
ITA
ESP
GRC
FRA
SVN
USA
IRL
POL
GBR
OECD
CAN
DEU
0
AUS
0
DNK
10
AUT
10
EST
20
SWE
20
BEL
30
CZE
30
SVK
40
NLD
40
FIN
50
JPN
50
Source : OECD (2016), Skills Matter—Further results from the survey of adult skills. OECD skills surveys, OECD Publishing, Paris.
29
Workplace integration of young people with few qualifications is difficult Employment rate of those leaving educationยน % of the population, 2017 100
100 Lower educated, general programme
90
Tertiary educated
90
CZE
LUX
NOR
SWE
DNK
NLD
PRT
LTU
IRL
0
GBR
0
SVK
10
POL
10
CHE
20
LVA
20
HUN
30
AUT
30
DEU
40
EU28
40
FIN
50
EST
50
ESP
60
TUR
60
BEL
70
FRA
70
ITA
80
GRC
80
1. Employment rate of the 20 to 34 age group, among workers who completed their studies with a mid-level qualification (ISCED levels 3 and 4, general programme) or a high-level qualification (ISCED levels 5 to 8) before the survey, and who are not currently enrolled in any other education or training, either formal or informal. Source : Eurostat (2018), "Labour status of young people by years since completion of highest level of education", Eurostat database.
30
It is difficult to get a permanent contract Transitions from temporary to permanent employment¹ % of employees with temporary contracts, 15-64 years old
0
EST
0
LVA
10
AUT
10
IRL
20
SVK
20
HUN
30
SWE
30
SVN
40
DEU
40
LUX
50
FIN
50
BEL
60
EA²
60
CZE
70
ITA
70
PRT
80
ESP
80
POL
90
GRC
90
NLD
100
FRA
100
1. Probability over three years of transition from a temporary contract to permanent employment. 2. Euro area member countries that are also members of the OECD, excluding Lithuania (16 countries). Source : OECD (2019), OECD Staff estimates and Eurostat data. 31
Main recommandations for an inclusive development of skills and employment Strengthening job quantity and quality Mainly focus employer labour tax exemptions on low wages. Restrict the possibility of receiving unemployment benefits during repeated periods of temporary employment and the reloading of rights over short employment spells. Modulate labour costs to reduce the excessive use of short-term contracts. Strengthen apprenticeship in secondary vocational schools, and social and economic integration programs for inactive youth. 32
Main recommandations for an inclusive development of skills and employment Improving labour market inclusiveness Merge welfare programmes and in-work benefits, taking into account housing benefits and public housing in overall household resources. Speed up the development of additional childcare services for the poorest households and in poor neighbourhoods.
Stimulating labour market adaptability and resilience Promote access to vocational training for the least qualified. Ensure access to transparent information and effective monitoring of the quality of lifelong learning programmes through additional evaluations and counselling. Encourage a more flexible rental market by developing shorter contracts and the use of rental guarantees. 33
Improving the efficiency of public investment
34
The stock of public capital is large Capital stock as a percentage of GDP, 2015
JPN
LUX
DNK
FIN
GRC
PRT
FRA
SWE
NLD
ITA
ESP
USA
SVN
AUT
KOR
OCDE
0
CHE
0
EST
20
CAN
20
CZE
40
BEL
40
GBR
60
DEU
60
POL
80
HUN
80
SVK
100
IRL
100
LVA
120
AUS
120
Source : IMF (2017), Investment and Capital Stock Statistics (database). 35
The quality of infrastructure is high… World Economic Forum index¹, 2017
CHE
NLD
JPN
FIN
FRA
AUT
USA
DNK
DEU
PRT
KOR
SWE
LUX
ESP
0
EST
0
CAN
1
OECD
1
GBR
2
BEL
2
AUS
3
CZE
3
SVN
4
HUN
4
IRL
5
GRC
5
ITA
6
LVA
6
POL
7
SVK
7
1.
Index from the lowest perceived quality (0) to the highest (7); the score is based on the assessment of business leaders operating in the country in response to the question: "How do you assess the general state of infrastructure (e.g. transport, communications and energy) in your country?”. Source : WEF (2018), The Global Competitiveness Report 2017-18 (database), World Economic Forum, Geneva.
36
‌ but investing in maintenance is necessary Maintenance as a share of total rail investment spending Percent 70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
0
Source : ITF (2018), Inland Freight Transport (base de donnĂŠes), International Transport Forum, Paris. 37
Investing for the future
38
Greener transport modes can be developed Rail freight market share As a percent of total inland freight transport, 20171
SVN
AUS
LVA
AUT
USA³
CAN
CHE
SWE
EST
FIN
CZE
OECD²
DEU
0
SVK
0
HUN
10
ITA
10
FRA
20
DNK
20
NOR
30
POL
30
GBR
40
JPN
40
PRT
50
NLD
50
KOR
60
ESP
60
GRC
70
IRL
70
1. Or latest year available. 2. Unweighted average for 2015, computed excluding Belgium, Iceland and Israel, for which data are unavailable or incomplete. 3. Total inland freight transport excludes pipelines. Source : ITF (2018), Inland Freight Transport (base de données), International Transport Forum, Paris.
39
There is room to improve research performance Share of international top publications1 % of publications among the 10% most cited, 20152
1. Share of the scientific output of domestic research institutions that is included in the set of the 10% most cited papers in their respective scientific fields, fractional counts. 2. Or latest year available. Source : OECD (2017), OECD Science, Technology and Industry Scoreboard 2017, OECD Publishing, Paris.
CHE
NLD
DNK
USA
GBR
BEL
ITA
AUS
SWE
DEU
CAN
0
FIN
0
AUT
2
IRL
2
FRA
4
EST
4
OECD
6
ESP
6
PRT
8
LVA
8
GRC
10
KOR
10
JPN
12
SVN
12
POL
14
CZE
14
HUN
16
SVK
16
40
Main recommendations to improve the efficiency of public investment Strengthen socio-economic efficiency considerations in the selection of large projects. Increase the share of infrastructure maintenance spending in public investment. Give a stronger role to standard unit cost approaches in setting intergovernmental transfers. Increase horizontal equalisation transfers between local governments to better address territorial disparities. Promote distance-based and congestion charges to develop alternative transport modes. Continue to increase universities’ autonomy to define their programmes and manage their staff. Continue to increase the budget of the National Research Agency.
41
For more information Disclaimers: The statistical 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.
http://www.oecd.org/eco/surveys/france-economic-snapshot
@OECDeconomy @OECD
42