The French Conundrum

The French Conundrum

January 18, 2016 in Economics by Rob Power
Written For Incasso Partners

The French Conundrum

Socialist Ideals VS Capitalist Realities

The world admires France in so many ways. Between Paris and the Riviera are a plethora of attractions that contribute to France being the most popular tourist destination in the world. There is scarcely a chef in the world who doesn’t hold dear the culinary traditions and cuisines of France. You can hardly tie your shoelaces within a mile of the Eiffel Tower without your girlfriend thinking you are about to propose to her! So yes there is much to admire; the charm, the mellifluous accent, the museums, liberty, equality, and fraternity, but alas the economy is not something we can currently add to the list of French strengths.

First of all it should be noted that the economic outlook doesn’t invoke the same harrowing foreboding as say, Greece, for example. In fact on the face of things a lot of French people are doing OK. They have a relatively high birth rate, usually a contributor to Economic growth. They have a very productive work force; again usually a statistic that would encourage analysts to predicts a growing economy. So why isn’t France flourishing when on the surface there seem to be no shortage of rain and sunshine?

France hasn’t been doing well for a while now. Since 1990 France’s per capita GDP has been growing slower than all but one other wealthy Nation; Italy, which has far more tangible issues with growth than France does. In fact the country’s manufacturing output is lower today than it was in 1990. So let’s look at some of the reasons it should be doing better. As aforementioned France has a healthy working age population, in fact if you compare France to Germany, Italy, and Spain; it is only France’s that is predicted to steadily increase and are forecasted to overtake Germany around 2045 becoming the largest workforce in the Eurozone. Now consider this, studies have shown that French workers are more productive than their German counterparts. That’s right; the laid back socialist French out-produce their neighbours who are internationally synonymous with efficiency. So there you have it, an abundant and highly productive workforce.

So where is this great nation stumbling?

Well many analysts will point to socialist measures that have been enacted throughout France over the years. For example the 35 hour work week, imposed by the French government in the year 2000. It may be a factor but when we compare the 1,489 hours that the average French worker put in in 2013 to the 1,388 by their German equivalents; it would seem that this is at least not the complete answer. Perhaps a greater contributing factor is France’s unemployment rate which stands at 10.5%, which is more than double Germany’s 4.7%. Additionally there is there labour force participation rate, that is to say the number of working age citizens in or looking for gainful employment, which stands at 71.2% versus Germany’s 77.5%; a considerable difference. Again analysts would point towards some of the social measures put in place as perhaps contributing to this joblessness. It is very difficult to fire people in France so employers are often reasonably quite reluctant to take on new employees. Who could blame them when their employees are protected by a labour code the density of which makes war and peace seem like a pamphlet. Combine this with a vast inefficient public sector and badly designed welfare system and we are starting to get the picture. There are people inside the job market who are comfortable within a nation where, unlike many of its contemporaries, income inequality is not growing. But then there are those on the outside whose chances of being brought in from the cold are demonstrably reduced by the same social measures that protect them if they succeed. A conundrum indeed, but what of the future? Is the investment required to increase employment rates forthcoming?

Well the French are certainly being proactive about it. Just this week France’s economy Minister, Emmanuel Macron, is visiting the U.S. extolling the virtues of French start-ups and exclaiming his intentions of making France less regimented in its approach to labour regulation. It is a somewhat, unlikely position for a French leftist, as many in French feel that the protections they have achieved for the employed in France to be a great victory of the modern era and they are sure to be noisy about anything they might interpret as a rolling back of such protections. Nevertheless, France is in trouble, growth and jobs are required, and no one is in any doubt of the vast economic potential this much beloved nation represents. Perhaps there is a balance to be struck between Social ideals and corporate requirements, if any nation is likely to find that balance, it is France.

Investment prospects in France

While they have been having difficulties growing their GDP, France is still a massively attractive prospect for investors. A steadily growing population combined with the largest tourist figures internationally guarantee myriad opportunities for the investor or entrepreneur in France. Couple this with the loosening up of business practices in recent times and opportunities are beginning to present themselves left, right, and centre. Of course France is a nation built on tradition and cultural business practices are slow to change. With this in mind it is very important for a businessman entering the marketplace to develop an understanding of how people operate in that environment. To this end, it is often advisable to align yourself with an international debt recovery agency whose expertise in multiple jurisdictions will help you ensure your business maintains fiscal liquidity.

Need help with International Debt Recovery?

If your business needs any help recovering debt either in your domestic market or any international market, Incasso Partners provide the complete solution. With their multi-jurisdictional expertise, and “no recovery, no fee” policy, there is no better way to recover the funds owed to you. Find out more today by visiting -