Event Report - How to boost French growth?

Event
Dec 16
Event

On Friday, December 16th, 2016, SAMMAN Law & Corporate Affairs was honored to welcome Robin Rivaton, Chief Executive of Paris Region Entreprises and Political Advisor, to present his views on the French economic situation as well as on the reforms that need to be undertaken in order to boost economic growth.

Robin Rivaton started by sharing his diagnosis of the overall situation in France, which, according to him, clearly shows that ambitious structural reforms are more than needed.

For a number of years, France has known a very high unemployment rate. This, combined with a GDP that has been stagnating for seven years, threaten the sustainability of the traditional institutional system, and in particular the social protection regime, which is based on an expected increase of the wealth produced.

Moving forward, Robin Rivaton also pointed out that the low amount of hours worked (per adult) in France, compared to other OECD countries, shrinks the impact of jobs on growth and encourage huge capital outflows from France. Combined together, these factors exert a negative effect on France’s foreign trade performance.

Consequently, France needs to quickly undertake structural reforms. According to Robin Rivaton, the French citizens are even more ready for this evolution that they are well aware of the existing threats to the French “social model” and wish to preserve it.

Pensions, which represent 12% of GDP (20% of public spending), would most likely be the first item impacted in the event of a major economic crisis causing, like in Greece, a default of payment. While a significant resistance to the adoption of these reforms still exists, with a possible risk of large-scale protests, Robin Rivaton thinks that the existing legal arsenal allows an adoption of the necessary reforms.

In his view, reforming the job market is a priority. Cost-effective and fast to implement, the results of this reform are likely to show in about 8 months whereas the tax reform can take up to 3 years to produce effects. He also believes that the job market reform is a prerequisite to all the others as it would bring a decline in unemployment as well as more leeway to public finances.

Robin Rivaton’s suggestion in terms of job market reform spans various levels of intervention. The work relationship framework (job entry and exit conditions for instance) needs to be relaxed, however, this will not suffice. The improvement of the productivity and the employment rate is based on a less complex employment law, especially with regard to employment contracts, in order to restore trust and predictability for both enterprises and employees, but it is also based on the quality of the work environment. Furthermore, the employment reform should be based on a constructive dialogue with the social partners.

Robin Rivaton also stressed the need to bring a social assistance the 4 to 5 million people who are currently unemployed and to create a more inclusive labor market. He recommends to create an exemption to the mimimum wage, within the framework of a specific contract, that would help bringing the unemployed back into the labour market.

In his views, focusing the bulk of these reforms on the job market will strongly show France’s willingness to change, renew the country’s image abroad, and restore the trust of her citizens.

Before closing the session, Robin Rivaton answered a series of questions from the audience, addressing issues such as training programs, public sector’s job cuts, Brexit, French politics… which sparked vivid exchanges.