French competitiveness

France's lost decade

A once-great industrial power looks for inspiration across the Rhine

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The lack of labour mobility must be a significant contributor to the lack of french competitiveness.

Consider transaction costs when buying and selling accommodations.

Transaction costs in selling up and then buying amounts to 25 per cent. Why would you even consider such a move. This discourages workers from moving to where the jobs are forcing employers to pay higher wages and making additional hiring an option of last resort?

Moreover rent controls or subsidized housing discourage job seekers from seeking employment even 20 kms. from their current residence.

Why would you want to move to a job if you lose your subsidised rent or be required to seek housing which is either not subject to rent control?

The answer of course is not to emulate Germany, but to quantify and eliminate such impediments which are often not readily identifiable as having an impact on competitiveness.

Without too much effort I can identify at least 7 other practices in France that impede competitiveness.



I find it hard to take any article with that illustration (and illustration caption) seriously.

And granted, Germany is doing very well at the moment but France is hardly doing too badly with other countries of a similar size (such as the UK and Italy). And doesn't using exports as the main comparison give a slightly distorted picture, since Germany's economy is based on exports to a larger degree than that of France?

That doesn't alter the percentages, of course.


>@thisnamewasn'tinuse "I find it hard to take any article with that illustration (and illustration caption) seriously."

Agreed. A photograph of striking lorry drivers blocking the roads with the caption "Another hard week at work" might have been more apt.


Its Cultural; France shares the same "ego curse" as all its latin brethren, "I have the right to enjoy everything but all the obligations are borned by somebody else but moi"
The result: all latin countries are falling behind the asians, the nordisk, and the anglo saxons.


A number of factors influence Frances relative competitiveness compared to Germany.It isnot so much french economic policy that has lead to a slide in France's position but rather a quantum shift in Germany's. The Hartz IV reforms, central to boosting german competitiveness, reduced payroll taxes and offset the reduced revenue by cutting certain benefits but foremostly by increasing VAT by 3% (to 19%).

It is true that France could and should do much more than it has done so far but it should be noted that the introduction of the "auto-entrepreneur" statute is not that fare removed from the reforms of the german labour market under Harz I.

Finally while the french government may be worried about french compeitiveness and france may have lost some market share of merchandise exports, it is interesting to note that according to the WEF France moved up from position 16 in 2008 to 15 in 2010, indicating that the relative decline is not neccesarily mirrored by an absolute decline.


Mmm the elephant is the room which the French refuse to question is the 35 hour working week. But it is more than that,it is the French ingrained national culture that enterprise and business is bad,and socialism and high taxes is good??

You have French workers kidnapping and keeping there bosses locked up,while the French police stand by and watch? Seriously who would want to invest in France as a country?
You would be buried under a mountain of bureaucracy and red tape,and anyone you employed you would have for life as it is almost illegal to fire anyone in France?


jolyonwagg => believe me, a lot of people are questioning the 35hr week. Maybe not loud enough yet, but its becoming a large part of public discourse. The French did vote for the right in 2007, and for a number of people that meant looking for at least some economic reform.

Also, there are number of very successful companies in France (the Economist did a rather interesting article a couple months ago about how France is a lot more 'capitalistic' then it thinks). So well there definitely are some social problems in France, lets not fall into the caricatural pitfall of 'they are all lazy slobs who are always on strike'. Some groups are just more vocal than others :)

I like riskstragies point about labor mobility. Housing in France is complex, expensive and hard to come about (especially in Paris). There also is a cultural factor - people are attached to home ownership - but that's slowly changing. Its a pity that's not really a part of French discourse. I'm studying in North America and I've been very impressed by people's ability to move around here.

I will ignore the gloating about how all latin nations are inherently decadent and the rest of the world is just so wonderfully hardworking. Just like Latin countries, there will be a time when anglo saxon countries will drown in their own hubris, and then it will be someone else's turn. It has a lot less to with culture than with cycles of the balance of power.


None of you get it .

Sure the 35 hour week are a problem- sure , and union militancy are a problem, but the real problem is hidden from view.
The real problem is the anti-competetive nature of French industry.

Any time a major company goes towards the edge, the government steps in.
So why should a company start to do Research, and innovate ? They will always be saved by the Government , not by their sharp business sense , nor by the tedious and hard work of innovation.

Not so different from the UK where coal mines or steel companies, or even for a while the car companies were nationalised to save them from the ravages of the market and stupid management.


What a load of Bull$hit.

France has more world-leading products than 99% of other countries around the globe. A short list:

+ Major Part of Airbus, which has 50% market share in large planes.

+ Dassault CATIA CAD System, #1 in this segment. Used also by Boeing and Lockmart.

+ Exocet Anti-Ship-Missle. The most successful weapon in sinking American and British warhsips after WW2.

+ The Mirage and Rafale Fighters, which are among the best.

+ Thales, making a critcal part of the most modern SAR Radar Satellites.

+ Renault, a major player in automotive

+ PSA, a major player in automotive

+ Air Liquide, #1 in technical gases


+ Danone

My french friends, you are strong and some reforms will put you on the path of great success again !

Here' a nice little list:


I forgot Airanespace, which is to a large degree french. It's #1 in satellite launch. Not Boeing, not Musk, not Russia, not Lockmart.


Littlegrasshopper, have you ever worked or lived in France more than doing a holiday job? jolyonwagg1 have you ever lived or worked in any of the "Latin" countries that you oh so knowingly critisize? Liveinhope do you get your new from anywhere else than SkyNews?

"None of you get it" as one wise commentator put it, despite the 35hr hour week, despite high payroll taxes and despite a militant workforce France is the 5 largest economy in the world, has some of the leading companies in the world, has a social systm that helps protect the poorest in times of recession and has one of the most internationally mobile workforces of any major western economy. All these facts are born out by the fact that France consistently enjoys the highest FDI inflows in the OECD (4 in 2007, 2 in 2009). I hardly think foreign companies would invest in France if the economy was so uncompetitive. Which directly contradicts your assertion Liveinhope. As to the other point that the government allways steps in to save companies in troubleI would point out that the EU framework applies the same rules to all EU countries. Out of interest which companies did the government step in to save recently?


Now let us see:
1..Half off! France "fights piracy" by subsidizing digital music.
2..French government to help out France's car industry?
3.Ailing French Wine Industry Gets Government Help
4..The state has long played an active role in French industry, but government involvement was greatly accelerated by a series of nationalization measures enacted by the Socialists in 1982. By 1983, about one-third of French industry—3,500 companies in all—was under state control

That only took me 5 minutes to find - I am sure there is a bigger list somewhere.

look for yourself - I don't hate the French - i am just giving an informed opinion.
If you ask an economist - They will tell you that Government subsidies are just a slow and expensive death for Industry, and a prolonged life for the Incompetent management.


@Liveinhope: So who has lost more industrial jobs ? Thatcherist England or Socialist France ? The first one, of course. Which contradicts your "economists".

In my previous list I forgot nuclear weapons, sea-launch intercontinental missiles, nuclear submarines *all* made by France itself. Not just copies of American technology as Britain does. Did I mention their aircraft carrier ? A proper one, not a toy like the British have.
France is doing the maximum what a country of this size can achieve in terms of technology and industry. They are way much more efficient than England, the U.S. and Russia. They have a nearly full technology portfolio to be a nuclear superpower. All what's missing is to ramp up production to be a real nuclear superpower.

Mind you, France has about 60 million inhabitants. Similar as Britain, but the latter only buys/copies American technology, has a tiny manufacturing base left and is mainly a Casino Operator. The latter is called "Canary Wharf".


ENAsBetter wrote:
Feb 5th 2011 8:45 GMT


ENAsbetter - Thatcherite England is definitely the loser , but don't forget they have a long history of government intervention - Every time they have a labour Government, they have Government intervention.
The UK started Government Intervention in the 60's and 70's , whereas the French started in the late 70's and 80's.
It takes a little time before the chickens come home to roost!

For France, a lot of the Government intervention has 'nationalism' as it's roots. The Wine Industry and the Car Industry are typical of this.The French loath the Idea of Foreign owners taking any part of those two Industries.
And a good analysis of the Wine Industry will show you that You french have lost out.Would you say that this Industry had Managers who took their markets for granted? If you agree with that, then I think Management is to blame, but only because they always knew that the Government would help the out.
A question I have to put to you - Did the Swiss ever help out their watch Industry?
This is not a good rational decision making process for Industry, But it is excellent for winning votes.

In a manner of speaking, Both countries behave like the world, or at very least their own government owes them a living.

In fact England's Industrial record is abysmal.
AND the only Industry England can really boast about is Finance. And is that going to be true in the future ?



So charging 0% VAT on nappies means the british government subsidises the nappy industry. Come on!!

And so the US didn't ntionalise its auto industry aswell? By the way most of the help provided by the state has already been paid back with above market interest rates (

Not sure where you dug up the one on the wine industry. What usually happens in these cases is that the state provides help for unproductive vinyards to convert to other products, but ive never heard of subsidised french wine crowding out aussie plonk.

Yes Mitterand did nationalise but then he and subsequent governments privatised again:

France lived through a long period of nationalization until the early 1980s, when nearly all the largest industrials firms as well as all the banks and public services were state-owned. Since then, a series of privatization moves have caused the state sector to shrink. Public services present a complex situation. For example, after its IPO, the national telecommunications operator France Telecom was simultaneously subjected to the deregulation of the telecom market in the world and to a new type of governance. EDF, the national electricity producer is next in line and should experience the same problems and opportunities.

FYI, just as happens with individuals or companies, the more assets you have the more creditworthy you are. Having shareholdings in profitable competitive companies (Airbus, Air France, SNCF, Renault, France Telecom etc) is actually a good business proposition.


There is no comparison between France and Britain. FRance is a real leading European Country. UK is more kind of a subsidiary of the US. UK is lucky to speak the same language as the US. That is their main and almost anly asset. Look at the influence France has on other countries. All southern countries look up to France. Legal systems, Social systems and many more are patterns to many countries. Germany is also very much interested in everything that happens in France. Believe me much more than about UK.

French industry is state of the art: trains, cars, banks, insurance companies, construction companies, technology etc..

France and Germany are real trend setters in almost all aspects for continental Europa and many other countries like Southamerica. I am not aware anybody in Southamerica cares what happens in UK. Watch TV in foreign countries!!


Glad to be told (once more) that as a Frenchman I am lazy while I see everyday at work (in England) my office colleagues leaving at 5.30PM sharp, having started at 9.00AM. This would kill all career prospects in all big French companies, not to mention small ones where life is even harder.

Do as I say ... etc.

Marie Claude


Apart in the Administration, the french workers don't make 35 H, they are allowed up to 40, even 42 as surpluse hours

and the average working time in Germany is lower than the average's in France, thanks to their Hartz IV rules they make 33 h



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