Are the French lazy? A comparison with the United States

Acknowledgements : Dr. STEAGALL and Dr. SHAPIRO for giving me the opportunity to lecture at the UNF. Dr. STEAGALL and Dr. SHAPIRO for giving me the opportunity to lecture at the UNF. Dr. PAULSON, Dr. BALIAMOUNE and Dr. TRAYNHAM for inviting me to their classes. Dr. PAULSON, Dr. BALIAMOUNE and Dr. TRAYNHAM for inviting me to their classes.

Presentation and Apologies : Master degree in Economics from La Sorbonne (Paris). Master degree in Economics from La Sorbonne (Paris). MBA degree from UNF in MBA degree from UNF in General Manager Assistant in a compensation and benefits consulting company in Paris. General Manager Assistant in a compensation and benefits consulting company in Paris. My beautiful French accent : Do not hesitate to ask me to repeat. My beautiful French accent : Do not hesitate to ask me to repeat.

2 countries – 2 philosophies: United States: United States: Everything is done to create jobs so you have a low level of social safety net (social security, unemployment compensation, free health care…). France: France: We think everybody cannot have a job therefore, we have a high level of social safety net.

In France We work less than most other countries …. We work less than most other countries …. Source IMF 2005

In France …but we are as productive as the Americans (Base 100 : US)... …but we are as productive as the Americans (Base 100 : US)... Source IMF 2005

Diagnostic : we do not work enough during our entire life. Employment rate of the yrs old ( %) UE40,5 Italy25,7 France29,9 Portugal42,1 Sweden44,0 Finland44,8 Germany45,4 United kingdom 55,7 Denmark64,0 Netherlands70,5 Our competitiveness is lessened by the fact that the only ones working in France are the years old. Our competitiveness is lessened by the fact that the only ones working in France are the years old. Employment rate of the yrs old ( %) UE41,8 Italy30,3 France36,8 Germany39,0 Netherlands43,5 United kingdom 55,5 United States 59,9 Denmark60,7 Japan62,1 Sweden69,0 Source IMF 2005

Problem This situation is unsustainable if we want to keep financing our social model … This situation is unsustainable if we want to keep financing our social model … Source IMF 2005

Remodeling our social model? We need to rethink our costly social model. Why? We need to rethink our costly social model. Why?

2 arguments are presented to justify an increase in annual labor time : We should work more to produce more wealth We should work more to produce more wealth We should work more to restore our competitiveness We should work more to restore our competitiveness But, are we sure that working more is the solution to our problems? But, are we sure that working more is the solution to our problems?

For 30 years, our level of living is 30% below the American one. However, during this period, the growth of our productivity has been greater than the American one. For 30 years, our level of living is 30% below the American one. However, during this period, the growth of our productivity has been greater than the American one. How can we explain that we did not close the gap with the U.S? How can we explain that we did not close the gap with the U.S? We reduced the number of annual working hours in the same proportion that we increased our productivity.

Between 1970 and 2000, productivity increased by 83% in France and by 38% in the U.S. At the same time, the number of annual working hours decreased by 23% in France and increased by 26% in the U.S. Between 1970 and 2000, productivity increased by 83% in France and by 38% in the U.S. At the same time, the number of annual working hours decreased by 23% in France and increased by 26% in the U.S. As a result, our GPD per capita increased at the same rate in both countries. As a result, our GPD per capita increased at the same rate in both countries. Source IMF 2005

The gap between the U.S and France is not explained by the fact that we are less efficient. The gap between the U.S and France is not explained by the fact that we are less efficient. We just work less than you : We just work less than you : Fewer people have a job in France (unemployment rate) Fewer people have a job in France (unemployment rate) When we have a job we work less than you during the year and during our entire life. When we have a job we work less than you during the year and during our entire life. France has used part of the growth of its productivity to increase its leisure time whereas the U.S used it to increase its income. France has used part of the growth of its productivity to increase its leisure time whereas the U.S used it to increase its income.

Is it a satisfying situation for France? Of course not. With an unemployment rate of 10% and the exclusion of young and senior people from the job market, we cannot justify this situation just because we have more time for leisure. Of course not. With an unemployment rate of 10% and the exclusion of young and senior people from the job market, we cannot justify this situation just because we have more time for leisure. Our growth is insufficient to afford our social model. Our growth is insufficient to afford our social model. The ratio between active and retired people is decreasing rapidly.

What should we do? Do we just need to work more as suggested by the IFM? No, for several reasons.

Productivity is the key for long term growth If we work more, it will mean that we do not consider that productivity is the major factor for economic progress : To produce more with less work. If we work more, it will mean that we do not consider that productivity is the major factor for economic progress : To produce more with less work. Productivity is the key for long term growth. The French situation should be the incentive to invest in education, research and development and the use of new technologies. Productivity is the key for long term growth. The French situation should be the incentive to invest in education, research and development and the use of new technologies.

Why working more is not the only solution? In the short term, an increase in labor time would have a negative impact on the job market because our growth is close to 2%. In the short term, an increase in labor time would have a negative impact on the job market because our growth is close to 2%. The companies would not hire because they would be able to make people work more. And more important, it will enlarge the gap between those working and the others. It would not solve our problem respect to the ratio active/retired people. It would not solve our problem respect to the ratio active/retired people. And last, our productivity would decline. And last, our productivity would decline.

What could be the solutions? The US and Japan create a lot more jobs than France in services. We try to be as productive as we can be in industry. But there is no international competition for jobs in services (hairdresser for example). The US and Japan create a lot more jobs than France in services. We try to be as productive as we can be in industry. But there is no international competition for jobs in services (hairdresser for example). France should be able to create thousands of jobs in services. France should be able to create thousands of jobs in services.

What could be the solutions? The problem is that the productive effort is concentrated on a small part of the population (10% of unemployment and 50% of people paying income taxes). The problem is that the productive effort is concentrated on a small part of the population (10% of unemployment and 50% of people paying income taxes). We have tremendous difficulties to create jobs and this makes it difficult to afford our social model (retirement, social security...). We have tremendous difficulties to create jobs and this makes it difficult to afford our social model (retirement, social security...). There is not enough incentive to take a job when you are unemployed. It is also too costly for the companies to hire or lay off people. There is not enough incentive to take a job when you are unemployed. It is also too costly for the companies to hire or lay off people.

Conclusion French people are not lazy. French people are not lazy. Our problems are not going to be solved just by working more. It would be too easy…. Our problems are not going to be solved just by working more. It would be too easy…. Our social model was created after WWII. Our social model was created after WWII. But since then the world and France have changed...

Questions?