“These unpopular reforms that France should nevertheless tackle” | EUROtoday

uA sure variety of financial coverage measures provoke an nearly instinctive refusal on the a part of a majority of French folks. As if struck by a taboo, a number of reforms, though doubtless to enhance the financial and social state of affairs, can hardly be talked about with out arousing opprobrium. Let us cite 5: the introduction of a capitalization part within the retirement system; the transition from a logic of job safety to that of safety of individuals and expertise; reform of the schooling system; the switch of a part of social contributions to VAT; and an in-depth reorganization of the general public sector. Let’s evaluate them.

Capitalization

This is clearly not a query of abandoning the pay-as-you-go system (during which belongings finance retirees’ pensions) for a pension system totally primarily based on capitalization (during which they save for his or her outdated age). Because the transition from one to the opposite would in actual fact essentially indicate, initially, a double contribution for lively folks, one financing present pensions, the opposite constituting their very own retirement capital. On the opposite hand, the creation, alongside the overall scheme and supplementary schemes, of a obligatory “third pillar” within the type of capitalization would make it potential to considerably increase the long run lifestyle of retirees.

The common actual return on an funding in French shares, together with dividends, since 1990 has been 6.9%, in contrast with financial progress of 1.4% per yr. It is tough in these circumstances to grasp the huge rejection of the opinion of the introduction of a dose of capitalization within the retirement system.

Flexicurity

Second taboo: the transition from employment safety to non-public safety, primarily based on the flexicurity mannequin which was, for instance, carried out in Denmark. In France, too sturdy employment safety stiffens the productive construction and slows down the diffusion of expertise. In corporations, the excessive price of layoffs deters sure essential developments and sure investments. This state of affairs is especially dangerous to the know-how sector, during which the failure fee of modern tasks is excessive.

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