France’s economy has been rocked recently by the gilets jaunes protests: demonstrations that began last November over rising petrol taxes and prices but have since widened into a more general anti-government movement. As president Emmanuel Macron ploughs on with his national debate to figure out what people actually want, we thought we would conduct our own mini survey. From ceos to bureau chiefs to professors, here’s our pick of suggestions for how to improve the French economy so that it works better for people and businesses.
There are no quick fixes. Macron’s reform programme is the best recipe on offer but needs to be sold much more convincingly as being in the longer-term interests of the nation as a whole. He has shaken up the political landscape, now he has to build on the new framework to push reforms and persuade the French it is time for change. So this is a broad political question that follows three decades of evasion by presidents from both the left and the right.
To be honest I’m not sure the French economy really needs “fixing” – in fact, it’s a terrific location to have a business, especially a start-up. Many start-ups that may have once preferred to go to the US or the UK are now choosing to come to France. The country has excellent engineers and technical talent and it is the best location in Europe when it comes to securing funding for young companies. The infrastructure and resources for start-ups are among the best in the world, and the government has also made a lot of positive changes with regards to the labour law.
Naturally there are always areas for improvement, particularly when it comes to later-stage companies. We only have a few late-stage funds (dedicated to technology) and a solid exit market still needs to be developed. The acquisition culture is also less developed and companies going public still prefer to list in the US. But in general, I don’t really believe the ecosystem needs fixing. It isn’t broken!
In May 1968, Jean-Paul Sartre stood on a box outside the Renault factory at Boulogne-Billancourt. He was there to ask workers to join the students’ protests. “Be brief,” a trades union official advised him. But Sartre, of course, wasn’t.
It took me a couple of decades on this island to understand why being brief was an important asset in our fast-moving societies. I feel this is something missing in French politics, culture and academia.
It is not that the British, with their innuendos and understatements, always get straight to the point. But at least they do not waffle, quote themselves to great lengths or discuss in public their own achievements. They also tend to be more down-to-earth and less formal, ironic given that France is a republic and Britain is a monarchy.
“Be brief” would be my advice to all political officials in France, not because time is money but because brevity is often a sign of clarity and intellectual rigour.
Fixing the economy is not only in the government’s hands, it’s also up to businesses. Companies can improve people’s employability by training their employees or by giving new generations their first professional experience through apprenticeships. At Engie, we have committed to doubling the number of our apprentices in France in the next three years. Companies can also build a more inclusive society by making high-quality services and products affordable to all. That’s why we launched our Energy Purchasing Power plan, enabling French citizens to replace their old heating equipment, thus making substantial savings.
Companies should act for the good. I take confidence in the fact that a growing number of them have become aware of their social responsibilities.
The best fix for the French economy right now would be for the national debate launched by Macron to succeed and provide concrete results that would stop the gilets jaunes protests, as they have already had a negative impact on the economy, the services sector and tourism. It would also allow Macron to carry on with his programme of reforms. Two that he plans to enact this year, on unemployment benefits and the pension system, are particularly sensitive and could reignite social tensions. Several governments before Macron’s have tried to reform the complex pension system and have failed, which makes it a major test for him. Also on his agenda is a reform of the state institutions (including the large public administration). The national debate could bring some fresh ideas for this as it was one of the demands of the gilets jaunes.
The French economy is not broken; international capitalism is. After the Second World War, in common with many other European countries, the French government adopted a system based on both a liberal free economy and a strong welfare state. The gilets jaunes protests and their support among the public shows a strong collective attachment to this model. However, to work properly it requires high levels of public spending and taxation. But the globalisation of capitalism has created international competition between states to provide investors with the most favourable conditions, ie. the lowest taxes.
As a result, maintaining a high level of public spending has become more and more difficult. In France taxation on income, consumption and petrol has become unbearable for many. By the same token, profits have reached an all-time high but corporate taxation has never been so light. This unfairness leads to resentment and protests. The only way out, for those who want to maintain a high level of social services, culture and education, is to prevent capitalists from dictating their law to states. To fix the French economy we have to get over capitalism.
The problem lies in the lack of economic education in France. The educational system prioritises hard sciences over economics and, even when it is taught, it is from a macroeconomic or Marxist perspective. Almost nobody in France has heard about the supply-and-demand law, which is why they cannot understand why it might be required to relax the job market or why lowering taxes is important.
The root of the solution would be to introduce rigorous pro-market lectures in French schools and universities. Unfortunately, trade unions would never agree! That is why I am sometimes pessimistic about my beautiful country.
The government should help small and medium-size companies (smes) that operate in France and are big exporters. The Italian government spends €40m annually to help promote “Made in Italy” but the numbers here are much smaller. We need trade agreements that lower import and export taxes – the one we are currently seeing with Japan, for example, is great for our businesses. There should also be continuing support to help us find our key markets abroad.
France should give incentives to smes to grow and remain independent; the current focus is on a few very vertical luxury groups that monopolise raw materials and makers, making it more difficult for us to access them. We need to have a more collaborative sme culture like they have in northern Italy, with a strong network of independent businesses and a culture of having each others’ backs.
With the current government focus on technology start-ups, traditional businesses linked to creation and local culture of craft feel overlooked. We do not fit into the institutional support for “innovation” that helps such firms with their product development, which is thriving while support systems for our creative industries are in danger. On top of that, the banking system in France confuses textile and creative businesses, meaning loans are difficult to arrange. Banks don’t consider the textile sector a good place to invest.
The current outlook seems to revolve around a “survival of the fittest” philosophy that actually favours bigger groups. smes need to be invested in too.