Economics Department

Economic survey of France 2007: Executive summary

 

Contents | How to obtain this publication | Additional information

The following is the Executive summary of the OECD assessment and recommendations, taken from the Economic survey of France, published on 27 June 2007.

Contents                                                                                                                           

While growth has proceeded in France since the 2001-03 slowdown much as in the euro area as a whole, it has been held back by weak competitiveness. Employment has been rising and the budget deficit coming down, but persistent high unemployment and low participation reflect underlying structural problems that need to be further addressed. Stronger employment growth would be beneficial for fighting poverty and social exclusion, as well as for boosting public finances. A key objective is to improve the efficiency of all resource use, in particular in the public sector, to tackle social problems more effectively and achieve greater longer-term sustainability of public finances. This Survey looks at a selection of key issues that the new government should place high on its reform agenda.

  • The social safety net does a reasonable job of protecting most people from poverty but is less good at avoiding social exclusion by facilitating integration into the labour market. Better co-ordination of policies and agencies towards meeting this objective is needed.
  • The education system produces high-quality graduates in many areas, but its labour-market focus is insufficient. Outcomes do not match ambitions with respect to equity at which the system aims.
  • The challenge of ageing has been only partially dealt with. More attention both to seniors’ labour-market participation and to the financing of pensions, health and dependency care is called for.
  • Decentralisation has made important changes in the way a number of policies are formulated and implemented. Moving responsibility to sub-national levels has not always improved efficiency, however, and accountability has sometimes suffered.

Tackling poverty and social exclusion is especially important for French policy-makers. A certain degree of duality in the labour market, where very well protected workers (“insiders”) are together with the unemployed and workers in insecure jobs (the “outsiders”) tends to foster exclusion. Present targeted policies relieve poverty quite effectively but need to be more employment-oriented. Better results from scarce resources would result from smaller increases in minimum wages. Increases in, combined with better targeting of  in-work benefits would help to reduce poverty further.

The education system tries to promote equity and growth, with mixed results. Pre-primary and primary education meet the equity objective and achieve good average outcomes, but thereafter the performance of the education system could be improved. Stronger incentives to achieve good performance are needed at all levels. Enhanced autonomy in schools and universities may be one way forward. Higher fees and selection on entry to university would allow greater efficiency to be achieved.

There is no time to relax in facing the challenge of demographic ageing. Past improvements in pension finance have not removed the need for further reform to avoid steady increases in contribution rates to finance the future commitments of public pension schemes. Health and dependency care also present long-term risks for public finance. Increasing participation rates at all ages would help, especially for older workers who currently tend to retire before the age of 60.

The efficiency gains from decentralisation of public services have yet to be fully achieved. Following substantial decentralisation it has been hard for the State to fully disengage. Reform is difficult, given the number of levels of government involved and the overlapping nature of many responsibilities. A period of consolidation is needed, focused on clarifying responsibilities and enhancing financial incentives for cost-efficiency.

 

How to obtain this publication                                                                                      

The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations. The complete edition of the Economic survey of France 2007 is available from:

Additional information                                                                                                  

 

For further information please contact the France Desk at the OECD Economics Department at eco.survey@oecd.org.  The OECD Secretariat's report was prepared by Paul O'Brien and Stéphanie Jamet under the supervision of Peter Jarrett.

 

 

 

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