Five ways France must improve its economy, according to the experts

Five ways France must improve its economy, according to the experts
Photo: AFP
The French economy isn't growing as quickly as it needs to, which is having an effect on job prospects, living standards and well-being, according to the latest report from the OECD. Here are five ways it suggests France could improve.
The French economy has slowed down, according to the results of the latest study from the global economics organisation, the OECD, which argues that France should focus on long-term strategies to create growth, improve public finances, create more and better jobs and ensure a more inclusive and cohesive society. 
Here's a look at five ways it suggests the country could do this. 
More reforms 
The OECD report pushes France to keep on with its economic reforms despite the “yellow vest” movement which has pushed back against them. 
“There is a real need to address the social challenges of long-term unemployment, difficulty in joining the labour market and weak social mobility,” OECD Secretary-General Angel Gurría said.
France given economy boost as it beats EU budget target for first time in decade
Photo: AFP
“The government has undertaken courageous reforms to boost economic activity, increase the disposable income of low-wage earners and put public finance on a firmer footing.”
The OECD said that French President Emmanuel Macron's reforms could add 3.2 percent to per capita GDP over the next decade, benefiting mostly middle and lower-middle income households.
Even more ambitious reforms in line with OECD recommendations – such as faster spending cuts and raising the retirement age – could lift that figure to more than 5 percent, added the OECD.
“Continuing pro-growth reforms, in line with recent measures, is key to further reducing unemployment,” the OECD report said.
Flexibility within the labour market
One of the things the OECD would like France to achieve with further reforms is flexibility in the labour market. 
While the organisation acknowledges that recent reforms in France have promoted a “more flexible labour market”, it says short-term contracts have “rapidly increased” which encourages breaks between employment. 
Macron launches second round of labour reforms
Photo: AFP
“Containing the use of short-term contracts would require increasing the relative cost of short-term hiring and reforming the unemployment insurance system so that it does not encourage recurrent short-term employment periods and unemployment spells,” said the report. 
“Moreover, favouring workers’ mobility would help match job offers and job seekers.”


Invest in training programmes
The report stresses the need for France to improve the quality of public spending which would improve the country's economy and potentially allow for lower tax rates in the future, particularly on labour. 
“France should capitalise on this reform agenda and take further measures to improve public spending efficiency, increase high-quality jobs and ensure that the economy of the future works for everyone.”
The organisation said that France should be investing in improving the quality of education and reforming training programmes to strengthen the skills of workers and include low-skilled workers in the labour force. 
French economic growth to 'fall sharply in 2018'
Photo: AFP
Improve digital infrastructure
France must improve its digital infrastructure which is much further behind countries with the best performing economies, said the OECD. 
“The quality of the digital infrastructure could improve significantly. Efficient, reliable, and widely accessible digital infrastructure will be key to reap the full benefits of digitalisation,” said the report. 
It went on to say that France should also invest in digital resources to carry out public administration tasks, which would “contribute to increase public spending efficiency”. 
Invest in transport and energy
France needs to make sure its transport and energy investments better tackle environmental challenges, according to the OECD.
“The transport sector accounts for a large share of pollution and emission reductions have been slow, while urban pollution remains high in some cities,” said the OECD. “Infrastructure planning needs to better reflect health and environmental costs and be consistent with government’s targets for reducing greenhouse gas emissions.”
The OECD also said that better transport systems would help “increase the efficiency of local labour markets.”

Member comments

Become a Member to leave a comment.Or login here.