France: The limits to the practice where fiscal deficits are used instead of reforms: The example of skills

France has a long tradition of reneging on necessary reforms while trying to offset this by using public money and by increasing its fiscal deficit. We can hope that this practice will stop, but is that certain? In this Flash we take the example of labour force skills: for a very long time, successive governments have let them deteriorate without reacting; the reforms implemented since 2017 will obviously have an impact on skills only in the long term. So what have been the reactions to the low skill level? The low skill level has driven up the structural unemployment rate in France, leading to an increase in public labour market spending; The low skill level has led to a low employment rate, leading to a rise in income inequality before redistribution, and increased public redistribution spending; Given the particularly low level of skills among the low-skilled, un skilled labour costs are too high, hence the need to reduce social contributions on wages; The low skill level worsen s companies’ cost competitiveness problem, hence the need to increase aid to companies which, perversely, is partly financed by increasing corporate taxes. It would have been preferable to deal with the skill problem 20 years ago.