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France 'gifted' but needs to stop 'loafing around'

The Local · 10 Apr 2015, 16:54

Published: 10 Apr 2015 16:54 GMT+02:00

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France is “an exceptionally gifted student who sits loafing around at the back of the class, doing nothing.”

That is the damning assessment of the country’s economy by Medef chief Pierre Gattaz.

His gloomy comment came a week after the economic think tank OECD said in its annual report that France needs a massive drive to simplify everything from the labour code to taxes and business regulations.

Gattaz said the labyrinthine rules and regulations governing business were the cause of the country’s stubbornly high unemployment, currently at nearly 3.5 million people, which he described as “the most serious injustice suffered by the French.”

He said small companies were afraid to hire workers because of the complex bureaucracy involved and the difficulty of letting them go if their business fares badly.

“I am surrounded by craftsmen and shopkeepers who say to me, Pierre, I used to have one or two employees and now I have none, and I will never hire anyone again because it is just too complicated and too costly,” he said in an interview with BFM TV news channel.

He said that the only way out of what he sees as the dire state of the economy was for the Socialist government to reform.

“The situation is looking good at the moment with growth slowly returning. We must use these coming months to carry out deep structural reforms in the country,” said Gattaz.

President François Hollande’s administration has been taking some steps to reform. The “loi Macron” - a bill named after economy minister Emmanuel Macron which aims to deregulate the economy and labour market - has been adopted by the National Assembly and is now being debated at the Senate.

The aim of the law is to boost the country’s growth and activity by encouraging more competition between businesses.

But while many critics say the bill does not go far enough, it has sparked fury among trades unions. They led tens of thousands of French workers onto the streets of cities across the country on Thursday to denounce the government’s "austerity" policies.

The protesters denounced the freeze of salaries and pensions, the loss of their purchasing power as well as the “loi Macron”.

In a bid to to encourage industrial investment and accelerate France's sluggish growth rate, the government this week unveiled a five-year, 2.5 billion euro programme of tax breaks for business.

Prime Minister Manuel Valls announced the exceptional tax break for industrial investments made over the next 12 months.

What he heralded as an "unprecedented measure" will allow companies to deduct 140% of the value of their industrial investments against their taxable benefits over five years, as well reduce their business taxes.

After coming in at a meek 0.4%, Finance Minister Michel Sapin said "for growth to become strong and resilient we've been missing ... the investment engine."

The investment tax breaks are in addition to the 40 billion euros that the French government plans to give companies in tax breaks through 2017 with its so-called Responsibility Pact.

Valls criticized companies for not holding up their end of the bargain in terms of maintaining and creating jobs.

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