France: The important matter of skilled labour costs and the competitiveness of industry

France suffers from a cost-competitiveness disadvantage given its level of industrial product sophistication, as shown by its export market share losses and the decline in industrial production capacity. In addition, the level of corporate social contributions is much higher in France than in competitor countries. It is therefore tempting to suggest a reduction in companies’ social contributions to improve their competitiveness. But the problem is that the unemployment rate among skilled wage earners is low: a reduction in social contributions on skilled labour would risk leading to an increase in skilled wages and not to an improvement in cost competitiveness. When we compare France and Germany, we see that corporate social contributions in manufacturing industry are higher in France, while wages excluding social contributions are higher in Germany. Lowering social co ntributions on skilled labour therefore does not appear to be the right instrument to improve industrial cost competitiveness. A comparison of OECD countries also shows that the weight of social contributions paid by industrial companies is not correlated with deindustrialisation.