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French Economy

The French are often worried about the situation of their country and periodically, studies and articles list the strong and the weak points of the French economy and society. Here are some of the most recent :

Strengths and weaknesses of France in 2005
In October 2005, the Center-Left weekly " Nouvel Observateur " tried to make a list of what's right and wrong in France. This is only an article : it is partial and some of the statements are well known but some others might be surprising to foreign readers. Here it is :

What's wrong :
1. We live above our means (budget deficit of the state : 3%)
2. Our expenses for health are skyrocketing (11% of GNP)
3. We work less than our neighbours (see figures)
4. Our pension system is vulnerable
5. We lost 1,6 million manufacturing jobs
6. Investment is growing too slowly (2% a year vs 3 or 4% in other European countries)
7. Our entrepreneurs are depressed
8. Our large corporations belong to foreign pension funds (44% of the capital of the CAC40 Index corporations)
9. People stay unemployed longer (see figures)
10. Young people have a harder time finding a job
11. The overhead on our salaries is huge (see anatomy of a paycheck)
12. Our labor force is expensive (see figures)
13. We have a large and growing number of civil servants (see figures)
14. 20% of our children leave school without any diploma
15. Our universities are poor (see figures)
16. Our wines do not sell as well as they used to
17. Our economic attractiveness is decreasing (from second to fourth destination for foreign investment)
18. Our balance of trade with China is in deficit
19. (My personal comments) I would add

  • We do not do well in integrating the children of foreign migrants in the French society (see more)
  • Not enough R & D (see figures)
  • In France, it is very difficult to change anything in a consensual way
  • (Many) more to come.

Reasons for hope :
1. We make more babies ! (1,9 per woman : only Ireland does better with 2,0 ; most other European countries are around 1,3/1,5)
2. Our life expectancy keep growing (see figures)
3. Household's consumption remains high
4. Our major international corporations are strong (see figures)
5. The welfare state protects efficiently against major risks of life
6. Our pensions are still good
7. Our health system is excellent and more cost efficient than in other countries
8. Manpower is very productive (see figures)
9. The French have never created as many new companies (320 000 in 2004, +9% on 2003)
10. ....and registred as many new patents
11. France is world leader for tourism (76 million/year, Spain and USA around 40-50)
12. Our business schools have a good image
13. We are very good in mathematics (see Fields Medals)
14. Our expressways are excellent
15. ...and our Fast Trains are world champions
16. The French policy of nuclear electricity is a success (see figures)
17. The debt ratio of French households is low
18. Good level of computer equipment and internet connexions
19. More people invest in the Stock market (now 10% of the population)
20. The budget of the Ministry of Defense is relatively high (2% of GNP)
21. ...and the army is active overseas (Afghanistan, Liberia, Sudan, Ivory Coast,..)
22. France is the 4th nuclear power
23. In the world, 260 million people speak French (see more)
24. Our movies and our TV programs sell well abroad (see more)
25. (My personal comments) I would add

  • France is ideally located in the middle of Europe
  • France has a long history and can survive a temporary down !
  • Click here for Inward investment in France in 2005
  • (Many) more to come..

 In April 2007, the magazine "Capital" published a special issue on "the state of France" (besfore the presidential election). It identifies the following :

Weak points :

  • for the past 15 years, the economic growth has been slower than the rest of Europe
  • the ranking for competitivity is mediocre (global market share 4,8% vs. 6,3% in 1996)
  • due to heavy constraints, small and middle businesses develop slower
  • the debt of the State is enormous (65% of the GNP, 18,000 Euros per inhabitant)
  • the working time is too low (35-hour week + vacation + early retirement) (see figures)
  • unemployement is consistently higher than in the rest of Europe (more than 8% for the past 25 years)
  • the retirement system is vulnerable
  • the results for education are mediocre, comsidering the money spent
  • not enough money for scientific research

 But there are strong points :

  • the most dynamic demography in Europe (the highest birthrate, with Ireland)
  • excellent infrastructures : transport (fast train TGV), electricity (cheapest in Europe), airports, ...
  • the best health system in Europe (and in the world according to WHO) : read more
  • a very developped social system (poverty, unemployment, handicap,...)
  • large internation corporation world leaders in their field
  • a very strong agriculture and food industry
  • the first touristic destination in the world
  • the first industry of luxury goods in the world (see figures)
  • an efficient environmental policy

Taxes on high salaries

  •  For executives, with the same salary (457,000 Euros), the % of taxes and contributions on salary is 43,7% in the USA vs. 66,6% in France
  • The figure in Europe varies between 45,1% in UK and 70,8% in Belgium (Source : Rapport Lavenir for the French Parliament, April 2002)
  • Back to the anatomy of a paycheck
 
 in 1000 Euros  France  USA  Germ.  UK  Belgium  Nederl
 Total cost for employer (1)  615,6  467,3  468,3  512,3  617,1  520,5
 Employer's contribution (2)  158,3  10,0  11,0  55,0  159,7  63,2
 Employee's income (3)=(1)-(2)  457,3  457,3  457,3  457,3  457,3  457,3
 Employee's contribution (4)  59,2  11,0  10,0  3,5  60,5  23,5
 Income tax (5)  192,4  182,6  241,7  172,7  216,5  253,9
 Total taxes (6)=(4)+(5)  251,7  193,6  251,6  176,2  277,0  277,4
 Net income (7)=(3)-(6)  205,7  263,8  205,7  281,1  180,3  179,9
 Apparent withdrawal (8)=(6)/(3)  55,0%  42,3%  55,0%  38,5%  60,5%  60,6%
 Real withdrawal (9)=((6)+(2))/(1)  66,6%  43,7%  56,0%  45,1%  70,8%  65,4%

The French society...
  •  The main forms of work contracts in France :

   C.D.I.  C.D.D.  C.P.E.(°)  Internship
 Name  contrat à durée indéterminée  contrat à durée déterminée  contrat première embauche  stage
 Type  the most frequent (>80%)    for people under 26 : the reason for the 2005 strikes  
 Maturity  unlimited  18 months maximum  unlimited  6 months maximum
 Trial period  1 to 3 months (6 months max) (renewable once)  contractual  2 years (the only difference with CDI)  contractual
 Termination  strictly regulated (must be justified by employer) except during the trial period  contractual ; can be renewed only once ; indemnity 5% at maturity  same as CDI  contractual
 Notice  1 to 3 months  contractual  same as CDI  contractual
 Indemnity in case of termination by employer  legal (1/10 month per year of length of service + conventional  same as CDI  same as CDI  none

(°) : created in January 2006 and abandoned almost immediately after huge demonstrations against it

  • More to come...

The (huge) strikes against the CPE in 2006 : a (mini) - case study

  • The problem :
    • unemployment is high in France (> 9%) and very high for young people (> 20% for people under 25)
    • all over Europe, the unemployment rate has been reduced by more flexibility : if employers could reduce their staff more easily they would be less reluctant to hire new people
  • The project :
    • The government has decided to establish by law a new job contract (C.P.E. = contrat première embauche) which would make it possible for employers to end a very long trial period (two years : today it never exceeds 6 months) without having to justify it (currently, it is a legal requirement).
    • This new contract would have no impact on existing contracts but it is expected that new positions would be created under these contracts.
  • The method :
    • The new Prime Minister wanted to go very fast though a specific law which was submitted to the Parliament under a Constitutional procedure (Article 49-3) which is a " yes " or " no " vote with no discussion or amendments possible.
    • There was no prior discussion whatsoever with employers associations or labor unions, political parties, etc....
  • The result :
    • A huge majority of young people, mostly students, stood against the law and demanded its withdrawal. In a few weeks, most French universities were blocked, millions of people demonstrated in the streets, the students were being joined by high school students and later labor unions.
    • On March 28, there was a big strike and almost 3 million people demonstrated in the streets on the theme " Say no to instability ".
    • Nevertheless, the Government declared the law would not be withdrawn and Villepin thought he would be politically dead if he backed-up : the situation was totally blocked. Finally the government gave up after almost three months of demonstrations and the CPE was abandonned.
  • About this case study : what is wrong with France ?
    • A political class which is absolutely autistic : D.de Villepin being a perfect example of it.
    • A preference for authority (i.e. laws) rather than discussion (consensus between social partners)
    • " Intermediary powers " (like unions) are too weak and their only chance to survive is radicalization
    • Only the King can put an end to a blockade : when the King is weakened (Chirac), no solution is possible
    • No economic culture and no understanding of the actual situation of companies by students and unions
    • A preference for ideas rather than facts
    • General self-centeredness : in France nobody is interested by the fact that a given policy did work in another country and could be used to solve the same problem in France.

Back to page Society

History : miscellaneous
  •  Losses in World Wars : a comparison USA / France / Britain :
         civilians (killed) in 1000s  military (killed) in 1000s  Total population (million)  losses as % of total population
     WW1  USA  negligible

     50

     85

     0,06%
       France  small

     1,400

     40

     3,5%
       UK  negligible

     800

     39

     2,05%
     WW2  USA  negligible

     300

     140

     0,2%
       France

     350

     250

     40

     1,5%
       UK

     62

     326

     47

     0,8%

For a city of 50,000 for instance, the monument to the victims of the war would bear :

  • in the USA : 29 names for WW1 and 107 for WW2
  • in UK : 1,026 names for WW1 and 347 for WW2 (plus : 66 names of civilians)
  • in France : 1,750 names for WW1 and 313 for WW2 (plus : 438 names of civilians)
  • Facts and figures on slave trade (source: Le Figaro Jan.31, 2006):
    • Main actors of transatlantic slave trade (millions of victims) (source : Hugh Thomas)

       Portugal

       4,65

       Great-Britain

       2,6

       Spain

       1,6

       France

       1,25

       Netherlands

       0,5

       British colonies in America

       0,3

       Others

       0,1
    • Total number of victims (estimates)

       Trade
      		  Million

       Source
      Oriental trade (to Maghreb and Middle-East) - VIIIth to XIXth Century

       17
      		  Ralph Austen
      Internal (African) trade

       14
      		  Patrick Manning
      Transatlantic trade - XVth to XIXth Century

       11
      		  Hugh Thomas
    • Abolition of slave trade
       

       Date

       British colonies

       1833

       French colonies

       1848

       Dutch colonies

       1860

       United States of America

       1865

       Spanish colonies

       1865

       Portuguese colonies (Africa)

       1869

       Brazil

       1887
  • Milestones for France :
    • 1685 : Code Noir (Black Code) : official regulation of slave trade (Louis XIV)
    • 1791 : Upheaval of Saint-Domingue (now Haiti)
    • 1794 : the French Revolutionary Assembly abolishes slavery (Abbé Grégoire)
    • 1802 : Napoleon re-establishes slavery
    • 1848 : the new Second republic abolishes slavery (Victor Schoelcher)
  •  Communism in France : a decreasing trend (Le Figaro, March 27,2006)
       % of votes for Parliament  number of members of the party  circulation of the party's daily newspaper l'Humanité  Name of Secretary General
     1946  28,2%  800,000  450,000  Maurice THOREZ (1936-1964)
     1951  26,1%  400,000    
     1956  25,9%  450,000    
     1958  18,9%  500,000    
     1962  21,9%  700,000  200,000  
     1967  22,5%  700,000    Waldeck ROCHET (1964-1972)
     1968  20%  600,000    
     1973  21,4%  600,000   Georges MARCHAIS (1972-1994)
     1978  20,6%  600,000    
     1981  16,1% 250,000    
     1986  9,7%  150,000    
     1988  11,2%  150,000    
     1993  9,1%  150,000    
     1997  9,9%  150,000    Robert HUE (1994-2001)
     2002  4,9%  134,000  50,000  Marie-Georges BUFFET (2001- )
    • Major dates of French Communism :
      • 1920 : Congrès de Tours = split from the Socialist Party
      • 1936 : supports the Front Populaire
      • 1939 : outlawed (after Hitler/Stalin pact)
      • 1941-44 : very active in the Resistance (after Hitler invaded Russia)
      • 1945 : participates in de Gaulle government
      • 1972 : signs the Common Program of the Left
      • 1976 : abandons the "dicatorship of proletariat"
      • 1981 : 4 communists in Mitterand's cabinet
      • 1997 : 3 communists in Jospin's cabinet
  • More to come

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Harriet Welty Rochefort writes articles and books about France and the French. Order her books:

  • "French Toast, An American in Paris Celebrates The Maddening Mysteries of the French", St.Martin's Press, New York, 1999
  • "French Fried, The Culinary Capers of An American in Paris", St.Martin's Press, New York, 2001

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