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ECONOMY

France must simplify life to save economy: OECD

France needs a massive drive to simplify everything from the labour code to taxes and business regulations, the liberal economic think tank OECD argued in its annual economic survey. We've summed up exactly what it wants France to do.

France must simplify life to save economy: OECD
President Francois Holande must continue to reform labour market says the OECD. Photo: AFP

The liberal economic think tank OECD made it clear on Thursday exactly what is wrong with France and what it needs to do to dig itself out of the economic doldrums.

The Organisation for Economic Co-operation and Development laid into France in its economic survey of the country, published on Thursday, telling Paris that it needs to dramatically simplify life for businesses and workers if it wants to arrest its flagging economy.

While the OECD noted France’s “enviable standard of living”, “high productivity” and “only average income inequality that hasn't worsened despite the crisis” the think tank said the country's economic recovery has been slow and unemployment was still rising.  

The country is in urgent need of simplification to unravel its “significant complexity of systems and institutions," the report concluded although it did compliment France on the "welcome pro-growth structural reforms" it has already made.

Economists from the OECD, who presented their report to France’s Finance Minister Michel Sapin on Thursday, said the government really needs make reform of the labour market its top priority.

It criticises the “strong protection” afforded to those workers on long open-ended contracts which is “hindering mobility” and the country’s notorious 3,000- page long labour code which it says "restricts flexibility in both the private and public sectors".

The report also blasts France over its public spending levels, “which at 57 percent of GDP is among the highest in the OECD and imposes a heavy burden on economic performance.”

The think tank also targets France’s numerous layers of regional bureaucracy, known as the “mille-feuilles” (thousand leaves) particularly the country’s 36,000 communities, which weighs heavy on public spending.

“Operating expenses, public-sector employment and social spending are all greater than in most other EU countries and there are too many sub-central governments with overlapping responsibilities,” said the report.

It also took aim at the vocational education system, which it says “fails to provide many with the skills they need to be hired”.

So what does France need to do to remedy its economy?                   

The OECD has laid out a long list of recommendations for the path it thinks Paris should follow to achieve economic recovery.

  • “Simplification on a broad scale” – Simplification was a word which popped up time and again, whether it was bureaucracy or shop opening hours. But most significantly the OECD says it is the country’s labour code that needs a real streamlining. France must “step up efforts to reduce complexity in the labour code, business norms and regulations, the structure of sub-central government, taxation and pensions,” the report said. So pretty much everything.
  • Cut taxes on labour – French companies have one of the highest payroll tax burdens in Europe and the OECD says it needs to be lessened.
  • Close small public hospitals – This is one of the measures the OECD believes France should take to cut public spending. It should also place a greater emphasis on outpatient surgery, which as it happens is exactly one of the measures the Minister of Health plans to take. Doctors should also be given greater incentive to limit prescriptions to French patients, renowned for being pill-poppers.
  • Cut the number of communes – France has around 36,000 communes, way too many according to the OECD. The government should group many of these communes together under one hat. There’ll be a few local mayors who might have a thing or to say about that.
  • Reform unemployment benefits – France is considered among the  most generous countries in the world when it comes to unemployment benefit, but a little too generous according to the OECD. The think tank says “the parametres” of the benefits system should be altered, “especially the duration”.
  • Education, education, education – The OECD says France can remedy the failures of its vocational education system by “hiring teachers who combine teaching with professional experience outside education” and provide those students who lack skills with more individual support.
  • Review regulations – France needs to employ an independent organisation “to conduct a thorough review of all existing and proposed regulations affecting firms,” the OECD says.
  • Eliminate restrictions on shop opening hours – This has been a controversial issue for some time and although France has moved to allow more Sunday shopping, Paris is unlikely to become a 24-hour shop till you drop city like New York just yet. The powerful unions will have a say about that.

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BUSINESS

What are the 26 French ‘unicorns’ hailed by the government?

France now has 26 'unicorns', something Emmanuel Macron's government sees as a major success. Here's what this means and how it affects France's future.

People dressed as unicorns attend a tech summit.
People dressed as unicorns attend a tech summit. France now counts 26 start-ups valued at more than $1 billion. (Photo by CARLOS COSTA / AFP)

In 2019, French President Emmanuel Macron set what seemed like an ambitious objective: having 25 French start-ups valued at over $1 billion by 2025. 

These companies are colloquially referred to as “unicorns” or licornes in French. 

The target was very on-brand. Macron had sold himself at a youthful, ambitious and liberalising president keen to lead France towards modernity. 

To achieve this goal, the government lifted regulations; hired liaison officers to manage relations between tech entrepreneurs and government ministers; created a new kind of visa to allow entrepreneurs, innovators and investors to move to France; and launched an incubator scheme known as the French Tech Tremplin (“French Tech Trampoline”) to help underrepresented groups such as women, poor people and those in the countryside to launch tech start-ups. 

Just three years later, it appears these efforts have paid off. 

“They told us that it was impossible – that creating a start-up nation was just an act. But collectively we have got there three years ahead of schedule,” said Emmanuel Macron on Monday, sporting a Steve Jobs-style polo neck as he celebrated the fact that France now had 25 ‘unicorns’. 

On Tuesday, La French Tech, a body run by civil servants aimed at creating a healthy environment for start-ups in France heralded another success – a 26th licorne

The latest addition is a company called Spendesk – it runs a platform that allows small and medium sized businesses to manage spending, expenses, budgets, payment approvals and invoices through a single integrated platform. It is already used by thousands of clients. 

Spendesk recently raised a further $100 million, pushing its overall value past the $1 billion mark. It plans to employ a further 700 people in France. 

La French Tech couldn’t contain its joy. 

“We don’t ask ourselves what is going on, we know it: #FrenchTech is booming #26unicorns”, wrote the organisation in its Twitter account. 

La French Tech claims that beyond the 25 ‘unicorns’ valued at $1 billion or more, there are a further 20,000 tech start-ups in France and that half of French people use their services daily. The organisation says that this sector has already created 1 million jobs – and that this figure should double by 2050. 

“French tech is obviously about more than these unicorns, but I see them as an example, a model for the rest of the ecosytem,” said Macron on Tuesday. 

So who are the other unicorns leading the way? 

Alan

This start-up was created in 2016 and offers health insurance coverage for individuals and businesses. What differentiates it from standard health insurance providers, or mutuelles, is that it functions through an easy-to-use app. Individuals can send medical bills directly from their smartphone and be reimbursed almost immediately. Doctors can be reached through the app’s messaging and video call services. Employers can manage arrêts de travail the comings and goings of poorly staff directly through the interface. It is currently available in France, Belgium and Spain, counting 230,000 members. 

Ankorstore

Ankorstore is an online marketplace aimed at supporting independent wholesalers – from florists to concept stores. It pitches itself as a platform to buy “authentic products and brands that e-commerce giants such as Amazon do not offer.” It is present in 23 European countries with offices in France, Germany, the Netherlands, Sweden and the UK.

BlaBlaCar

This carpooling service has more than 100 million members across 22 countries. It connects drivers with people looking for a lift on a highly accessible app and website based platform. BlaBlaCar allows people to save money on transport and said that it saves 1.6 million tons of CO2 emissions in 2018 through ride-sharing – the platform has grown significantly since then. This company has also started running a bus service, BlaBlaBus. 

BlaBlaCar launched BlaBlaBus in 2019.

BlaBlaCar launched BlaBlaBus in 2019. (Photo by PHILIPPE DESMAZES / AFP)

BackMarket

Backmarket is a website for buying used, unused or reconditioned electronic devices. The company sells everything from cameras, to laptops, to iPhones – at well below the market rate. Many of the products come with a warranty. The company is keen to emphasise its role in reducing electronic waste and carbon emissions involved in manufacturing new products.

Contentsquare 

This start-up has existed since 2012. It acts as a tool to allow website and app designers to monitor how their users behave while on their webpage/app. Contentsquare provides analytical information that can help to tailor websites to improve the digital experiences of users. 

Deezer

Deezer is an online music streaming services similar to Spotify. It was founded in 2007 and counts 16 million active users. 

Doctolib

Doctolib is a platform that connects patients to medical professionals. Creating an account is free and allows you to book medical appointments, with filters such as the kind of care you want, the area of the medical practice and the languages spoken by the doctor. It runs via a user-friendly app and website and is available in France, Italy and Germany. During the Covid-19 pandemic, it has become the main way that French people have booked vaccination appointments. 

Exotec

This company was founded by two engineers in 2014 and manufactures intralogistic robots. The technology is used in warehouses of retailers, supermarkets, e-commerce and industry. In essence, it is used to remove human labour from the supply chain. 

iad

iad is a network where people can sign up to learn how to become an independent real estate agent – it also serves as a site where people can look for property to buy or rent. 14 percent of all properties sold in France in 2020 went through this platform according to one study. 

Ivalua

Ivalua is a tool used by organisations to manage spending and supplies. It operates largely though Artificial Intelligence and provides a wide range of functions designed to improve collaboration and decision-making. 

Ledger

Ledger is a company that provides individuals and businesses an easy way to buy and sell cryptocurrencies and store these currency on USB-type hardware. If you get sick of that guy at work who never stops talking about Bitcoin, this is probably not one for you. 

Lydia

This is a payment app that allows people with French bank accounts to send and receive money with other users, and is often used by friends to reimburse each other with small amounts for dinner, drinks, holidays etc. If you hold your savings in the app, you can benefit from a 0.6 percent interest rate. It also allows you to pay for things overseas without incurring fees. 

ManoMano

ManoMano is an online marketplace specialised in DIY and gardening equipment. It employs 800 people in 4 offices and operates across 6 European markets: France, Belgium, Spain, Italy, Germany and the UK. It’s website sells products from more than 3,600 retail partners and stocks more than 10 million products. 

DentalMonitoring

Patients can download this app after undergoing dental work. They can then use the secured system to send pictures of their teeth to their dentist (if the dentist is subscribed to the service). The start-up boasts that it can allow dentists and orthodontistes to carry out remote consultations and that the AI technology embedded in the app can automatically detect dental problems. 

Meero

Meero is a company that connects professional photographers to clients and vice versa. It organises one photo shoot every 25 seconds and has more than 30,000 customers around the world. 

Mirakl

Mirakl is a cloud-based e-commerce company that allows retailers, manufacturers and wholesalers to access a single online market place. The start-up aims to help other businesses scale-up their operations rapidly and describes its staff as “Mirakl workers” (as in the French ‘miracle’ pronounced me-rackluh). 

OVHcloud

This start-up was founded in 1999 and is now Europe’s biggest cloud provider, offering both public and private information storage solutions. They also provide domain name registration, telecoms services and internet connection. 

PayFit

Payfit is an automated payroll service that allows employers to save time dealing with spreadsheets and other systems. It is an intuitive bit of software already being used by 6,500 small and medium-sized businesses.

Qonto

Qonto provides financial services to freelancers, self-employed people, small businesses, charities and new businesses. It provides solutions for managing expenses, accounting, invoices and payments. 

Shift

This company is based in Paris and helps global insurance companies to detect fraudulent insurance claims via artificial intelligence technology. 

Sorare

This is a fantasy football game where users build and manage squads, trading, selling and buying players. It makes use of blockchain technology. French footballer Antoine Griezmann is a major investor. 

A tradable player card from Sorare.

A tradable player card from Sorare. Credit: Sorare

Swile

This is a financial and networking service for businesses and employees. It essentially is a bank card with an app that allows employers to issue anonymous surveys to employees, facilitate communication via a messaging service, organise collections and plan events. 

Vestiare Collective

This is an online marketplace for second-hand luxury fashion. Be aware that some items still cost thousands of euros, so they’re only ‘bargains’ in relative terms. 

Veepee

This is an online and app-based service. Users can create an account for free to be alerted of upcoming sales of up to 70 percent on their favourite brands. It is available in eight European countries including the UK. 

Voodoo

Voodoo is a French mobile game developer and publisher. It provides help for video game developers to promote their work and councils them on the development process. In the past, Voodoo has come under fire for producing games that appear to be closely modelled on other games already on the market.

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