The OECD has a new country report out on France:
“France’s rising government debt threatens the sustainability of public finances in the eurozone’s second biggest economy, the Organisation for Economic Co-operation and Development has warned in its latest country report.
The Paris-based OECD said that a lack of control over public spending could leave France unprepared to deal with the financial consequences of an ageing society.”
Economic Survey of France, 2005
France has high productivity per hour worked and a sophisticated social welfare system, but it also suffers from low labour force participation and high structural unemployment. This poor labour market performance contributes to a persistent budget deficit which is exacerbating, rather than alleviating, the fiscal pressures arising from ageing.
? Rising public debt threatens fiscal sustainability. It is partly a result of insufficient public expenditure control and insufficient public understanding of the need to meet long-run challenges as well as short-term targets.
? Aspects of the labour code designed to protect employees, and some aspects of the system of social transfers have had some unintended but perverse consequences leading to structurally high levels of unemployment and low participation rates.
? Dynamism and growth of activity and employment are held back by a lack of competition in a large number of service sectors.