What can France do to “catch up†with Germany?
When we compare the employment rate, per capita income, the weight of industry, export market shares and corporate profitability between France and Germany, we see that France decoupled from Germany in 2005. This resulted mainly from: Germany’s policy of labour cost reduction from 2000 to 2006, which France may not want to emulate; The declining quality of France’s education system relative to Germany’s; The declining efficiency of France’s public sector and the growing weight of pensions, leading to a higher corporate tax burden, which is negative for employment; The shortfall in innovation and modernisation among French companies relative to German companies. To “catch up†with Germany, France must therefore improve its education and vocational training system, make its public sector more efficient, reform its pensions and modernise its companies. This is quite an agenda.