June 16, 2024

French experts call for reforms as productivity drops - EURACTIV.com

French experts call for reforms as productivity drops – EURACTIV.com

The productivity of the French economy has fallen dramatically over the past 20 years, due to drastically low levels of education and a misleading tax incentive system, according to a group of experts who advised the prime minister.

in a new one Reportpublished on Thursday (September 29), the Council for Economic Analysis (CAE) examined how low productivity in France has affected the economy over time.

From 2004 to 2019, a decline in sector-wide productivity in France resulted in a loss of €140 billion in GDP.

Between 2006 and 2019, France lost 5.8 percentage points in per capita GDP compared to Germany, or about €65 billion in tax revenue.

To solve the problem, the report’s authors called for fixes.

In addition to better teaching mathematics and social skills in schools, they also propose reforming France’s pioneering research tax credit programme.

“The decline in productivity is a major issue of French economic policy that needs to be addressed,” said one of the report’s authors, Xavier Jaravel, a professor at the London School of Economics.

National debt is a nuisance to France

With the European Central Bank (ECB) signaling that raising interest rates is no longer a taboo, the issue of reducing public debt is back on the French political agenda. EURACTIV France reports.

French students do worse

French students do not do well in mathematics. According to Program for International Student Assessment (PISA) figures France is twenty From 38 countries in the Organization for Economic Co-operation and Development.

Even in primary and secondary education, France is ranked seventh to seventeenth in the world TIMSS rating from 21 countries.

See also  Netflix glitch - The streaming service apologizes

France also does not do particularly well among the top performers. In 2019, French children aged 13-14 who did best in mathematics ranked only 29th, compared to children who did equally well in 38 other OECD countries.

When it comes to learning about social behaviour, France does particularly poorly compared to other OECD countries, with only Germany and Japan lagging behind. The United States, the United Kingdom and Denmark are in the lead.

The reason for this is, at least in part, the particularly rigorous teaching style, which is mostly presented in the form of lectures, explains Maria Guadalupe, one of the co-authors.

Guadalupe said she would like to develop “teaching practices that focus more on teamwork and personalize the communication of knowledge.”

Experts advising the prime minister are therefore calling for a “national strategy for innovation for all”, the goal of which is to “increase interest in scientific and innovative professions”, where geographical, social and gender disparities are still very large.

According to experts, “Mathematics knowledge increased by 10 [Prozent-]It indicates an increase in annual per capita growth of about 0.2 points of GDP.”

After Germany faced its own PISA problems in the mid-2000s, it was able to improve the country’s math skills by 10%.

Better distribution of research funds

In their report, the researchers also found that financial mechanisms to support private research, while necessary, are not well distributed.

They focused on France’s main innovation tax credit (CIR) – a tax mechanism that all companies can take advantage of when investing in research and development, regardless of company size and sector. By their calculations, the system “disproportionately benefits large companies,” particularly in terms of the total number of patents pending.

See also  Berlin live on ZDF for the first time with presenter Diana Zimmermann

For the same amount of tax breaks, small and medium enterprises (SMEs) file 2.6 times more patents than large companies.

The ratio is even worse for so-called “triple” patents, which protect innovations in Europe, the United States and Japan: SMEs file four times more patents than their larger competitors.

These findings were also confirmed in a 2021 study by France Stratégie, another research body that reports to the prime minister, which highlighted that tax write-offs favor small businesses more than others.

“The tax spending on the CIR is consistent with the total budgets of the CNRS, INSERM and CNES,” explained Nicolas Chanute, one of the report’s authors, referring to national research institutes and groups.

“Special research is needed, but refocusing spending on smaller companies seems unwarranted,” he added.

By comparison, other European countries do not seem to have such problems.

In the UK, for example, companies can benefit from a “variable subsidy based on company size”, at a higher rate for SMEs.

On the German side, the private research loan benefits small businesses as it offers a 25 percent discount with a €4 million cap.

In accordance with the practices of other countries, Chanute suggests that France reduce the ceiling from 100 to 20 million euros and increase the subsidy rates from 30 to 42 percent.

“The biggest losers are going to be the biggest losers, but these are the same ones that have benefited from corporate tax cuts or excise tax cuts in recent years,” he added.

Thanks to this reform, small and medium businesses could be among the big winners.

See also  Communication from the Ministry of Foreign Affairs and European Affairs regarding temporary restrictions on immigration

This article originally appeared EURACTIV.fr.

[Bearbeitet von Zoran Radosavljevic und Nathalie Weatherald]