Productivity and long term growth

Going for Growth 2018 - France note

 

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Going for Growth is the OECD flagship report analysing structural policy settings and economic performance to provide policymakers with concrete reform recommendations to boost growth and ensure that the gains are shared by all. The 2018 Interim Report reviews the main growth challenges and takes stock of reforms enacted over the past year - in both advanced and emerging economies - on policy priorities identified in the previous issue of Going for Growth.

Country highlights

The gap in GDP per capita vis-à-vis most advanced OECD countries has proven persistent. Potential GDP per capita growth is well below pre-crisis levels, owing to both a lower employment rate and weak labour productivity growth. Inequality has increased since 2008 but remains below the OECD average.


Reducing excess coverage in wage agreements, while streamlining union representation, would enhance employment and hence equity. Quickly implementing the quality insurance system for training, improving the individualised support for weaker students and more apprenticeships in secondary schools would improve the equality of opportunity and help low-skilled workers enhance their productivity. Building on recent competition reforms would also bolster productivity and innovation.

Going for Growth 2017 recommendations include:

  • Reduce excess coverage in wage agreements and streamline workers’ representation by reducing the administrative extension of collective agreements, aligning union finances better with membership fees, and continuing streamlining workers’ representation, in particular for larger firms.
  • Reform job protection and strengthen active labour market policies by continuing to improve legal certainty for dismissals, evaluating wage subsidies and enhanced counselling for the young and bringing penalties more into line with job-search efforts. 
  • Improve the equity and quality of education by implementing the guidance and quality-assurance systems for training quickly, and ensuring access to a wide range of training offers through the personal account. Introduce more apprenticeships in upper-secondary schools and provide teachers with professional training and pedagogical support to effectively implement individualised support for weak students.
  • Reduce labour taxation by streamlining labour cost reductions, translating them into contribution cuts across the board, financed by spending cuts and an increase of taxes on other bases.
  • Reduce regulatory barriers to competition by reducing entry barriers, quotas and exclusive rights in other regulated professions, and creating the same conditions for Sunday trading everywhere.

Recent policy actions in these areas include:

  • The major labour market reform streamlined workers' representation. Sector-specific agreements will have to include specific conditions for small and medium enterprises. The Labour Minister and individual firms now have more leeway to condition the administrative extensions of collective agreements on an evaluation of their economic and social effects. A ceiling on the compensation paid by the employer in the case of unfair dismissal has been introduced, reducing legal uncertainties.
  • Equity in education has been improved by halving class size to 12 pupils for grade 1 and grade 2 in poor neighbourhoods.

France: Latest Economic Forecast 

France: Latest Economic Survey

 

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