The incomprehensible behaviour of French companies

French companies ’ labour costs are too high given their level of product sophistication, which explains why they are los ing market shares , why their profitability is low and why they have to borrow to finance their investments . In such a situation, companies should normally try to rapidly increase labour productivity by making substantial productivity investments that enable them to reduce un it labour costs . However , while the French corporate investment rate is high, its technological content is low ( low investments in new technologies, very low level of automation) and, as a result , labour productivity is barely increasing . So it is incomprehensible that French companies are not correcting the high labour costs in France by modernising their capital to increase labour productivity. A possible explanation is the low level of labour force skills in France , which perhaps discourage s companies from investing in sophisticated equipment as they lack employees with sufficient skills to use this equipment.