Francois Hollande was elected French President in May 2012 on the promise of ‘reverting the unemployment curve’ using growth policies.
Three years later, the promise has not materialised. Unemployment in France is at historic highs. The latest jobless figure has reached the symbolic threshold of 3.5 million, writes Dr Emmanuel Martin.
Long-term unemployment increased by 10 per cent in one year. And that is only for category A in the mainland. The latest figure for all categories and all territories is more than 5.5 million.
This ties in with figures of rising business bankruptcies which are up 7.6 per cent in the first quarter of 2015.
A combination of unwise policies and constantly changing business rules is creating legal uncertainty. This is highly toxic for investment and risk, and has caused this tragedy. The new, but very modest, ‘supply’ turn is far from enough.
It is time for French politicians to really wake up.
The International Monetary Fund has pointed out the need for reforms in the French labour market where rules currently hinder competitiveness. The complexity of the the French labour code and the costs it forces upon entrepreneurs, ends up being a pro-unemployment guide. Even the redistribution measures, thought to benefit companies, are ignored by many businesses because they are so complicated and can lead to tax inspectors being sent out. The labour code, which regulates employment and trade union law, needs rethinking.
The IMF is right, but there is more.
French economist Bernard Zimmern said France lacks ‘gazelles’ - the fast-growing small companies which could create jobs. But for them to raise money is still complicated in France - more so than the UK, for example - because French tax rules penalise investors.
France must reduce its overall public spending as this is stifling not stimulating the economy. And, more and more people are hiding their activities in the informal sector to escape paying taxes and contributions and to avoid red tape.
But, as always in a post-election year, local taxes will increase. This is a symptom of the lack of sound management of taxpayers’ money.
Public spending will never be reduced until accountability is included in the French democratic process. This is the deep reform France has to undertake.
The shameful fact is that the big spenders of taxpayers’ money shield themselves from such accountability.
President Hollande has two years before the next elections. He will probably do nothing and use the fight against terrorism or global warming to fill the void. But this will not solve France’s economic woes.