Saturday, February 5, 2011
France's lost decade
This is a great followup article to the one we had to read for class on friday. Talks about france's more current economic situation and how they are doing through the recovery.
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France is compared to Germany here in order to emphasize the fact that France's competitiveness is decreasing while the contrary is true of Germany's competitiveness. Some of the statistics stated in the article that justify this statement are that France's share of European merchandise exports has fallen from 15.7% to 13.1% and that in 2000 French exports were 55% that of Germany's, while now that number stands at just 40%. In addition, the articles states, "The social costs of labour borne by French employers are among the highest in the euro zone: 50.3 euro for ever 100 paid to a worker, compared with 28 euro in Germany". This can clearly be one of the main contributions to France's decreased competitiveness, along with all of the other labor demands in France.
I would add that the high labour costs in France decrease efficiency greatly. Specializing, as the article says, would help them. Yet whatever they specialize in, it is likely they would have competition from other states in Europe. France must increase the efficiency of its agricultural sector, which has lagged behind the leading countries since the Agricultural Revolution. With a better agricultural base, food prices could be lowered. An increase in ag. production, coupled with a shift to specializing in service and industries not covered by Germany would be effective. Regardless, I think reform in France is unlikely to come soon or happen quickly (when it does) because of the French culture of resisting change. Their pride and unwillingness to change will hinder progress.
For many, France has always been seen as the Utopia for workers; a 35 hour work week, great benefits, and great vacation time. But this attitude of 'entitlement' as the article calls it, may be what is contributing to France's economic troubles. They have seen productivity decrease over the past decade while the minimum wage slowly increases. Fighting for workers' rights is a worthy cause but when these pursuits are affecting a country's strength, certain benefits should be re-examined.
Many lessons can be taken from Germany. Germany is the foundation of certain social welfare systems like social security, but they've managed to control the cost of those programs and increase productivity.
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