Are the French lazy?Are the French lazy?

A comparison with the A comparison with the

United StatesUnited States

Acknowledgements :Acknowledgements :

Dr. STEAGALL and Dr. SHAPIRO Dr. STEAGALL and Dr. SHAPIRO for giving me the opportunity to for giving me the opportunity to lecture at the UNF.lecture at the UNF.

Dr. PAULSON, Dr. BALIAMOUNE Dr. PAULSON, Dr. BALIAMOUNE and Dr. TRAYNHAM for inviting me and Dr. TRAYNHAM for inviting me to their classes. to their classes.

Presentation and Apologies :Presentation and Apologies :

Master degree in Economics from La Master degree in Economics from La Sorbonne (Paris).Sorbonne (Paris).

MBA degree from UNF in 2001.MBA degree from UNF in 2001. General Manager Assistant in a General Manager Assistant in a

compensation and benefits compensation and benefits consulting company in Paris. consulting company in Paris.

My beautiful French accent : Do not My beautiful French accent : Do not hesitate to ask me to repeat. hesitate to ask me to repeat.

2 countries – 2 philosophies:2 countries – 2 philosophies:

United States:United States:

Everything is done Everything is done to create jobs so to create jobs so you have a low you have a low level of social level of social safety net (social safety net (social security, security, unemployment unemployment compensation, free compensation, free health care…).health care…).

France:France:

We think We think eeverybody cannot verybody cannot have a job have a job therefore, we have therefore, we have a high level of a high level of social safety net.social safety net.

In FranceIn France

We work less than most other We work less than most other countries ….countries ….

1459

1809 18071707

1619

14281340

1815

United S

tatesFrance

JapanSpain

United Kingdom Ita

ly

Germany

Netherlands

Average number of hours worked per year (2002)

Source IMF 2005

In FranceIn France

……but we are as productive as the but we are as productive as the Americans (Base 100 : US)...Americans (Base 100 : US)...

97

72 74

88

106

95

109100

United S

tatesFrance

JapanSpain

United Kingdom Ita

ly

Germany

Netherlands

Labour productivity (2002 - output per hour worked)*

Source IMF 2005

Diagnostic : Diagnostic : we do not work we do not work enough during our entire life.enough during our entire life.

Employment Employment rate of the rate of the

15 - 24 yrs old 15 - 24 yrs old (2002 - %)(2002 - %)

UEUE 40,540,5

ItalyItaly 25,725,7

FranceFrance 29,929,9

PortugalPortugal 42,142,1

SwedenSweden 44,044,0

FinlandFinland 44,844,8

GermanyGermany 45,445,4

United kingdomUnited kingdom 55,755,7

DenmarkDenmark 64,064,0

NetherlandsNetherlands 70,570,5

Our competitiveness is lessened by the Our competitiveness is lessened by the fact that the only ones working in France fact that the only ones working in France

are the 25-55 years oldare the 25-55 years old..

Employment Employment rate of the rate of the

55 - 64 yrs old 55 - 64 yrs old (2003 - %)(2003 - %)

UEUE 41,841,8

ItalyItaly 30,330,3

FranceFrance 36,836,8

GermanyGermany 39,039,0

NetherlandsNetherlands 43,543,5

United kingdomUnited kingdom 55,555,5

United StatesUnited States 59,959,9

DenmarkDenmark 60,760,7

JapanJapan 62,162,1

SwedenSweden 69,069,0

Source IMF 2005

ProblemProblem

This situation is unsustainable if we want This situation is unsustainable if we want to keep financing our social modelto keep financing our social model ……

61,255

45,9

38,3

70,9

55 56 57 58 59

age

Workers of 55 years old and more employed ( 2003 - %)

Source IMF 2005

Remodeling our social model? Remodeling our social model?

We need to rethink our costly social model. We need to rethink our costly social model. Why?Why?

75,1 73,5 72,9 71,8 69,265,4 64,8 64,7 62,8 62,6

59,662,9

UE

Denmar

k

Nether

lands

Sweden

United

kingdom

Austria

Irela

nd

Germ

any

Czech

Repub

lic

France

Sloven

ia

Belgiu

m

Employment rate (2003 - %)

2 arguments are presented to 2 arguments are presented to justify an increase in annual labor justify an increase in annual labor time :time :

We should work We should work more to produce more to produce more wealthmore wealth

We should work We should work more to restore more to restore our our competitivenesscompetitiveness

But, are we sure But, are we sure that working that working more is the more is the solution to our solution to our problems? problems?

For 30 years, our level of living is For 30 years, our level of living is 30% below the American one. 30% below the American one. However, during this period, the However, during this period, the growth of our productivity has been growth of our productivity has been greater than the American one. greater than the American one.

How can we explain that we did not How can we explain that we did not close the gap with the U.S?close the gap with the U.S?We reduced the number of annual We reduced the number of annual working hours in the same proportion working hours in the same proportion that we increased our productivity. that we increased our productivity.

Between 1970 and 2000, productivity Between 1970 and 2000, productivity increased by 83% in France and by increased by 83% in France and by 38% in the U.S. At the same time, 38% in the U.S. At the same time, the number of annual working hours the number of annual working hours decreased by 23% in France and decreased by 23% in France and increased by 26% in the U.S . increased by 26% in the U.S .

As a result, our GPD per capita As a result, our GPD per capita increased at the same rate in both increased at the same rate in both countries.countries.

Source IMF 2005

The gap between the U.S and France is The gap between the U.S and France is not explained by the fact that we are less not explained by the fact that we are less efficient.efficient.

We just work less than you :We just work less than you : Fewer people have a job in France Fewer people have a job in France

(unemployment rate)(unemployment rate) When we have a job we work less than you When we have a job we work less than you

during the year and during our entire life.during the year and during our entire life.

France has used part of the growth of its France has used part of the growth of its productivity to increase its leisure time productivity to increase its leisure time whereas the U.S used it to increase its whereas the U.S used it to increase its income.income.

Is it a satisfying situation for Is it a satisfying situation for France?France? Of course not. With an Of course not. With an

unemployment rate of 10% and the unemployment rate of 10% and the exclusion of young and senior exclusion of young and senior people from the job market, we people from the job market, we cannot justify this situation just cannot justify this situation just because we have more time for because we have more time for leisure. leisure.

Our growth is insufficient to afford Our growth is insufficient to afford our social model. our social model. The ratio between active and retired The ratio between active and retired people is decreasing rapidly.people is decreasing rapidly.

What should we do? What should we do?

Do we just need to work more Do we just need to work more as suggested by the IFM?as suggested by the IFM? No, for several reasons. No, for several reasons.

Productivity is the key for long Productivity is the key for long term growthterm growth

If we work more, it will mean that we do not If we work more, it will mean that we do not consider that productivity is the major consider that productivity is the major factor for economic progress : To produce factor for economic progress : To produce more with less work. more with less work.

Productivity is the key for long term growth. Productivity is the key for long term growth. The French situation should be the The French situation should be the incentive to invest in education, research incentive to invest in education, research and development and the use of new and development and the use of new technologies. technologies.

Why working more is not the Why working more is not the only solution?only solution?

In the short term, an increase in labor time In the short term, an increase in labor time would have a negative impact on the job would have a negative impact on the job market because our growth is close to 2%. market because our growth is close to 2%. The companies would not hire because The companies would not hire because they would be able to make people work they would be able to make people work more. And more important, it will enlarge more. And more important, it will enlarge the gap between those working and the the gap between those working and the others.others.

It would not solve our problem respect to It would not solve our problem respect to

the ratio active/retired people.the ratio active/retired people.

And last, our productivity would decline. And last, our productivity would decline.

What could be the solutions?What could be the solutions?

The US and Japan create a lot more jobs The US and Japan create a lot more jobs than France in services. We try to be as than France in services. We try to be as productive as we can be in industry. But productive as we can be in industry. But there is no international competition for there is no international competition for jobs in services (hairdresser for example). jobs in services (hairdresser for example).

France should be able to create thousands France should be able to create thousands of jobs in services. of jobs in services.

What could be the solutions?What could be the solutions?

The problem is that the productive effort is The problem is that the productive effort is concentrated on a small part of the concentrated on a small part of the population (10% of unemployment and 50% population (10% of unemployment and 50% of people paying income taxes).of people paying income taxes).

We have tremendous difficulties to create We have tremendous difficulties to create jobs and this makes it difficult to afford our jobs and this makes it difficult to afford our social model (retirement, social security...). social model (retirement, social security...).

There is not enough incentive to take a job There is not enough incentive to take a job

when you are unemployed. It is also too when you are unemployed. It is also too costly for the companies to hire or lay off costly for the companies to hire or lay off peoplepeople. .

ConclusionConclusion

French people are not lazy.French people are not lazy.

Our problems are not going to be Our problems are not going to be solved just by working more. It would solved just by working more. It would be too easy….be too easy….

Our social model was created Our social model was created after WWII. after WWII. But since then the world and But since then the world and France have changed...France have changed...

Questions?Questions?