France in debt and without work

Low growth and high unemployment remain the main problems of France

The economic program will become one of the determining factors of success in the presidential elections in France. In recent years, Europe's third-largest economy is trying to cope with weak growth, high public debt, unemployment and budget deficits.

 On May 7, France will host the second round of presidential elections, in which Marin Le Pen and Emmanuel Macron stepped out. The new leader is expected to solve important problems - determine the country's relations with the European Union, deal with immigration and terrorism. But for many voters, the economic context is equally important, there are enough problems.

Economic growth in the past five years remains weak and is 0.2-1.3%. According to the results of 2016, according to Eurostat, GDP increased by 1.2%, less than in the euro area (1.8%) and in the whole European Union (1.9%).

 Chronic unemployment

In particular, despite the generally high standard of living and high productivity, the French are concerned about unemployment, whose level is about 10% (that is, there are no jobs for more than 4 million people).

In March of this year, unemployment was 10.1%. This is higher than the average for the eurozone 9.5% and much worse, for example, the Netherlands and Austria (below 6%), the UK (less than 5%) and Germany (less than 4%). It is important that among the French at the age of 15-24 years, unemployment is even higher - 24%, said CNN.

One could expect an improvement in the situation, as the eurozone continues to recover from the recession, but many experts are sure that to solve the problem of unemployment, the pace of recovery will not be enough.

The International Monetary Fund (IMF) in its report says that to reduce unemployment even to 8.5% of France will be quite difficult. This forecast reflects what the IMF calls the "deep-rooted inflexibility of the structure" - it makes the labor market in the country poorly adaptable, as it becomes difficult and financially disadvantageous for employers to hire new employees.

One of such factors is the so-called tax wedge - this is the difference between the salary that an employee receives in his hands and what he actually costs the employer. In addition, the dismissal procedure is full of uncertainties and can be delayed for an indefinite period.

Labor market experts note that while protecting workers from unfair dismissals must exist, in the current form in France the system is not balanced and acts as an obstacle for hiring new employees.

In addition, there is a 35-hour work week problem that sets a threshold for possible rework. Critics believe that this creates additional difficulties for employers, supporters say that such a system protects employees.

In addition, as described by BBC Nicola Brandt of the Organization for Economic Cooperation and Development (OECD), there are rules that limit the development of companies with more than 50 employees.

Brandt claims that because of this, there are not enough medium-sized companies in France, which, for example, form the backbone of the economy of neighboring Germany.

At the same time in France, a very high level of productivity - an indicator that demonstrates the contribution of each employee. This reflects the presence of a large number of highly skilled managers and engineers, as well as the presence of a highly developed transport and energy infrastructure.

However, this signals also about the high cost of hiring people. Business does not want to hire low-skilled employees, since it is too expensive, instead, it invests money in equipment and software, which increases average productivity. And since the level of productivity as a whole is high, the rate of its growth decreases (as, indeed, in other developed economies).

Public spending last year amounted to 56.5% of GDP, which is higher than in other developed countries.

The advantage of this is the high level of public services (spending on social programs is 31.5% of GDP) and low-income inequality, but this also means that individuals and legal entities have to pay a lot of taxes.

The state of public finance is also not cloudless. Despite the fact that the cost of government loans is low, the ratio of debt to GDP does not please economists. A widely used characteristic of the government bond market is debt, which must be paid in the next 10 years.

In France, this figure is below 1%, which is much better than those of the eurozone countries that have faced the problem of public debt, such as Spain, Italy, Portugal or Greece.

Short-term loans the treasury of France takes even under a negative interest: this means that investors have to pay extra to the state so that it takes money from them.

However, the overall burden of public debt is quite large and amounts to more than 90% of GDP (in the early 2000s, this figure was about 58%).

Due to all the factors more and more specialists are moving to the domain of Freelance. This alternative is attractive because of its conditions. Workers may choose the type of work they prefer to do and the payment they want to receive. In accordance with the new regulations, individuals in France may earn more than 60 thousand euros per year with the minimum taxation.

Therefore, self-employed have no longer need an additional routine, such as creating any forms of companies in order to earn more than 50 thousand per year and pay higher tax rate.

Today, in the era of startups all kinds of services are moving to the world web because more and more people each year realize that they can yearn as much as they may in the « normal » job by doing freelance. Due to globalization, services of all kinds are expanding from local markets.

Freelance services of any kind allow to a local professional to work worldwide and to become more successful in his or her field without leaving home or a cafe. 

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