Should France lower labour costs or raise skills?

France suffers from the combination of high labour costs and low labour force skills . T his is also the case of Italy. There are two ways to tackle this problem: Either by judging that skills cannot be improved or that doing so would be an extremely long process: labour costs must then be reduced (minimum wage freeze, continued reduction in corporate social contributions and production taxes, etc.); Or by judging that wages cannot be lowered and that corporate taxes can be lowered no further: it is then absolutely vital to raise skills (improve the education system, vocational training system, etc.). The first strategy has been pursued for example by Spain since 2009. For France and Italy, it would mean accepting a fall in the economy’s level of sophistication and a loss of purchasing power. The second strategy is obviously preferable, but it remains to be seen whether France and Italy can raise their skill level .