Report
What impact of the decline in productivity in France and the euro zone on wages, corporate earnings and fiscal deficits?
Labour productivity fell by 1 % in the euro zone between 2018 and the second quarter of 2023; and it fell dramatically in France ( by almost 3% ) over the same period. This slight decline or sharp fall in productivity has inevitably led to a fall in income for companies, households or governments. In both the euro zone and France, the fall in per capita productivity (slight in the euro zone, significant in France) has been borne by employees (fall in real wages) and governments (rise in fiscal deficits), but not by companies, which have increased their profit margins. The problem is that compensating for the fall in productivity by increasing the fiscal deficit in order to preserve corporate income cannot continue on a permanent basis.
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