OECD Economic Surveys: France 2019

Description

France's economic growth has slowed down after a gradual recovery. Limited productivity and employment gains have reduced the growth of GDP per inhabitant; public spending remains very high. Reducing public expenditures is needed to put debt on a firmly declining path. This and streamlining the tax system would also help reducing taxes, which would boost economic activity eventually. Continuing to foster a more flexible labour market would lead to higher productivity growth and living standards. The unemployment rate is particularily high for low-skills, and young and older workers: higher skills and better education outcomes would support a more inclusive labour market and intergenerational mobility. The quality of the public capital stock is high in France: improving its maintainance would strengthen this asset. New investment should help drive the economy towards greener growth - in particular investments in energy and transport - and more digitalisation. This should be achieved by applying rigourous cost-benefit analyses even more widely. SPECIAL FEATURES: LABOUR MARKET PERFORMANCE; PUBLIC INVESTMENT Basic statistics of France, 2018 Executive summary Key policy insights Economic growth has peaked The economic outlook has weakened, but remains positive Financial risks Better use of public spending to boost growth and well-being Key economic and social challenges remain Reducing public spending and improving their efficiency Containing local government spending Reforming the pension system Containing health care spending Reforming the delivery of public services to improve their efficiency Reducing inefficient tax expenditures Making taxes more favourable to employment and productivity The tax burden on businesses is hefty The property tax system has room for improvement Illustrating the effects of OECD-recommended reforms Ensuring environmental sustainability Improving productivity, employment and social mobility Product and services market reforms would boost growth Continuing the efforts to prevent corruption Boosting innovative business investment Leveraging the potential of cryptoassets to finance innovative business investment Strengthening skills through initial education Bibliography Thematic Chapters Chapter 1. Improving labour market performance Implementing the OECD Jobs Strategy The labour market has improved but challenges remain Those with few qualifications and young people face the most difficulties Employment and inequality have polarised Wages have decoupled from productivity The labour market needs to be transformed successfully Strengthening and adapting people’s skills Promoting lifelong learning and skill acquisition Increasing support for those in the greatest difficulty The government has focused on training the least qualified Subsidised jobs have been refocused on the non-market sector Improving young people’s move into employment Encouraging job quality and productivity gains Improve incentives to work for low wage earners Reducing labour market duality Strengthening collective bargaining Limiting inequality and improving support for low incomes Better co-ordinating and simplifying support for low income households Reducing gender bias at work Bibliography Chapter 2. Improving the efficiency of public investment Overview and challenges to public investment The stock of public capital is extensive and its quality is high… …but a stronger focus on maintenance and on a thorough selection of investment projects is needed Local governments are responsible for the majority of public investment and the private sector could play a bigger role Investing for the future Strengthening framework conditions for effective public investment Towards a better prioritisation and selection of investment projects Promoting the use of socio-economic assessments prior investment decisions Spreading good practices to all relevant stakeholders Raising public awareness of economic efficiency considerations to improve investment decisions Leveraging the private sector in the provision of infrastructure Strengthening local government capacities for public investment Continuing institutional reforms would help achieve efficiency gains Transfers to local governments should better reflect their spending needs Improving public procurement Better maintenance and greener investment in transport and energy Improving transport infrastructure investment Zero-carbon transport infrastructure should be better included in investment plans The increasing focus on maintenance spending is welcome Promoting car-sharing services can relieve investment needs in public transport Developing an efficient pricing for the use of road infrastructure would help finance maintenance needs and promote alternative transport modes Promoting appropriate energy infrastructure Raising energy efficiency to mitigate energy demand The economic challenges of nuclear power Promoting renewable energy sources Developing electricity interconnections Encouraging digitalisation and innovation Fostering a faster transition towards digitalisation The quality of digital infrastructure is modest Leveraging digital investment to improve public-sector efficiency Getting the most out of public investment in R&D Competitive funding of research is increasing, but remains low Support for business innovation has increased substantially Bibliography