France’s deindustrialisation is illogical: What is driving it?

France’s R&D effort is not negligible, its training of mathematicians and engineers is reput able and it has an important industrial tradition. And yet France is deindustrialising rapidly. Why? The answer is well known: labour costs are abnormally high given the level of product sophistication, which is quite low. It will take time to raise the level of product sophistication (modernising capital, automating, etc.), so could labour costs be reduced in industry? A reduction in corporate social contributions on industrial wages does not seem to be the right solution: given the hiring difficulties in industry and the fact there is full employment among skilled workers, a reduction in corporate social contributions would drive up wages instead of driv ing down total labour costs . The solution is found in education and training: more people must become qualified to become wage earners in industry in order to loosen the constraint on labour resources in industry and thus drive down industrial labour costs .