Lisbon Strategy for Growth and Jobs
France National Reform Programme
2008-2010
OCTOBER 2008
France National Reform Programme, 2008–2010
1
Introduction
The aim of the French government is to lay the groundwork for "renewed growth"1. This is
reflected in the present reform programme, designed to meet the objectives of both the Lisbon
Strategy and the French President for 2012. Clearly, an unprecedented reform drive will be
required to increase potential growth by one point, to restore full employment and to reduce
poverty by half.
The economic environment, burdened by a major financial crisis, a slowdown of the world
economy and high oil and commodity prices, makes these reforms all the more necessary as they
will make the French economy more resilient.
The national reform programme presented here to the European institutions and our European
partners is already underway. The density, depth and scope of the reforms (almost one hundred
measures that have already been adopted or are in the pipeline, with a far-reaching impact on vital
areas are presented here) show the ambition of the programme. These reforms go beyond the
recommendations of the Council of the European Union2 and the recommendations addressed to
the euro area members3. The Council recommendations focus on a few key areas (public finances,
competition in network industries and flexicurity). These are the target of important reforms. But
the French reform programme embraces many other areas, such as sustainable development,
which is one of the government's stated priorities and an integral part of the Lisbon Strategy or
reinforcement of the innovation capacity.
This programme was developed with Europe firmly in mind. Far from limiting the scope of
analysis and outlook to the national sphere, it places the major French structural reforms within
the broader framework of European Union policy. Thus French policy-making is in line with the
major European initiatives, as exemplified by the implementation of the Small Business Act, the
Better Regulation initiative, competition policy and the additional reforms to transpose the
Directive on Services in the Internal Market. Moreover, the programme is fully in compliance
with the Integrated Guidelines for Growth and Jobs 2008-2010, as evidenced by projects financed
with Community funding (ERDF and ESF).
The National Reform Programme is based on the principles of good governance. The
government's approach calls for active involvement and support by all players in the process of
change. This is a sine qua non for successful reform. This approach implies close collaboration
between the government, the unions and employers' organisations to ensure the highest quality
laws and regulations and the broadest possible support for their implementation. It further requires
concomitant reform of all economic sectors to ensure economic effectiveness, since everything
hangs together in a complex society, and to ensure fairness, since in this way all players are
affected by the structural changes. The government's policy of dialogue and consultation is clear
from the way in which this document was prepared, which took place only after extensive
consultation of the social partners (Economic, Social and Environmental Council, Committee for
Social Dialogue on European and International Issues), the associations (National Council of
Policies to Combat Poverty and Social Exclusion ) and the local authorities. A high degree of
expertise was ensured by consultation of the major independent public authorities (Energy
Regulatory Commission, Independent High Commission for Equality and Against
Discrimination) and the Competition Council, the competition watchdog. Lastly, the French
government acknowledges the wish of all these national players to be actively involved in the
1
http://www.premier-ministre.gouv.fr/chantiers/croissance_847/
See Appendice
3
See Appendice
2
2
France National Reform Programme, 2008–2010
design, implementation and follow-up of this programme. It therefore intends to maintain its
consultation policy and to subject the programme from time to time to upgrade reviews.
The reform programme is based on three main lines. The first deals with sustainable growth,
innovation and the development of competitive businesses. Its purpose is to stimulate France's
growth potential by removing barriers to business expansion, by revitalising competition and by
strengthening innovation capacity. The Economic Modernisation Act of 4 August 2008 was a
vital step in this direction. The priority assigned to sustainable development - reflected in the
organisation of the Grenelle de l’Environnement Round Table - will also help stimulate growth
and innovation in what is a burgeoning sector.
The second main line of this programme focuses on labour market reforms in order to offer
citizens of all ages the widest range of opportunities. The reform of the Public Employment
Service and the implementation of a flexicurity system can be expected to make the labour market
more effective. Activity is promoted by measures focusing on overtime, policies to improve
gender equality at work, the fight against poverty traps - particularly the creation of a Working
Solidarity Benefit - and assistance with professional reintegration for the population groups
furthest from employment. These measures will help stimulate growth-oriented work and ensure
maximum choices of activity at every age. Work will further be made more attractive by measures
to better distribute the gains of economic growth, including efforts to promote a renovated social
dialogue, initiatives to grant employees a greater share in the results of their company, to
reviewing wage negotiations, to improve working conditions and to fight exclusion and
discrimination.
The third line of this programme - the sustainability of public finances - will be achieved by
raising potential growth, by carrying through an in-depth reform of the organisation of public
administrations and by a strict control of expenditure, which will lead to a cut of the spending
growth rate in half. Expenditure control is based on the introduction of governance rules through
multiyear public finance programmes, for application of a general public policy review process
and for measures to improve the efficiency of social security spending. On the revenue side, taxes
and social security contributions will be kept stable until the return to a balanced budget. Lastly,
the pension system, burdened by population ageing, continued to be adjusted in 2007 and 2008.
The burden will inter alia be eased by measures to encourage and develop activity among older
workers.
This programme was prepared during the summer of 2008 and may be adjusted to cope with the
worsening of the economic environment, hurt by a major financial crisis and worsening economic
conditions due to a combination of slowing world growth and rising oil and commodity prices,
and an increasingly strong euro versus the dollar. A first series of measures has already been
adopted to make sure the available funds meet the needs of SMEs. In line with European efforts,
special attention will have to be paid to restoring the stability of the financial sector and to
preserving good financing conditions for economic activities. The economic environment does not
affect the relevance of the reforms presented in this programme. The implementation of these
reforms is more necessary than ever since they will improve the resilience of the French economy.
Their impact on growth, jobs and purchasing power will be felt primarily in the years ahead, once
they have begun to produce their full effect. As a result, the French economy will be more
competitive and more active and will therefore be able to make the most of the opportunities
offered by the globalisation process, which will be of benefit to all and so contribute actively to
European Union policy.
France National Reform Programme, 2008–2010
3
CONTENTS
1.SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
6
Facilitating business growth
6
Rallying entrepreneurs, stimulating the creation of activities
Simplifying company law
Better regulation
7
10
10
Improving the financing of the economy
13
Making the French financial marketplace more attractive
Reducing payment times
Creating endowment funds, increasing venture capital
13
14
14
Stimulating competition
15
Establishing a competition authority with increased powers
Boosting competition in the retail sector
Strengthening gas and electricity competition
Improving the efficiency of rail freight transport
Reforming the French ports
Extending competition in the banking sector
Modernising regulated sectors and professions
15
16
17
19
21
21
22
Shifting the technological frontier by strengthening innovation capacity
24
Investing more and better in public research
Transferring knowledge from public research to the business community and providing support for corporate innovation
Developing the digital economy
Ensuring excellence in higher education
Guaranteeing quality basic training for everyone
24
25
27
29
30
Promoting sustainable development
32
Reducing greenhouse gas emissions
Stepping up sustainable development research
Halting the loss of biodiversity
Promoting sustainable development at local level
32
33
34
34
2. OPPORTUNITIES FOR EVERYONE
37
Modernising the social dialogue
38
Improving the operation of the labour market
39
Reforming the Public Employment Service
Promoting worker mobility, strengthening career security
Stepping up lifelong learning
39
41
42
Promoting activity
44
Making work and activity more attractive
Making working hours more flexible
Improving the employment rate of older workers
Promoting full integration of young people into the labour market
Guaranteeing gender equality at work
Improving conditions in the workplace
Attracting foreign workers
44
44
45
47
48
48
49
Better distribution of the gains of economic growth
50
Developing employee ownership, incentive bonuses and profit sharing
Renovating wage negotiations
Fighting poverty and exclusion
Fighting discriminations
50
51
52
53
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
57
Controlling and improving the efficiency of public expenditure
58
Defining an overall public finance strategy involving all players
Continuing the general review of public policies
Controlling social security expenditure, satisfying new needs
58
59
61
Streamlining taxes and social security contributions
65
Taxation in the service of a more competitive economy
Fairer taxation
Taxation in the service of sustainable growth
65
66
66
4
France National Reform Programme, 2008–2010
TABLE OF CONTENTS
Guaranteeing the financing of the pension system
67
Ensuring equality among pension schemes
Balancing pension schemes
Encouraging longer careers
Ensuring the solidarity of the pension system
67
67
68
68
Appendices
Council recommendation on the 2008 update of the broad guidelines for the economic policies of the Member States and the Community and
on the implementation of Member States’ employment policies
69
Council recommendation on the 2008 update of the broad guidelines for the economic policies of the Member States and the Community and
on the implementation of Member States’ employment policies
70
List of abbreviations used
72
France National Reform Programme, 2008–2010
5
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
1
SUSTAINABLE GROWTH, INNOVATION
AND BUSINESS DEVELOPMENT
France has recorded average growth of 2.0% p.a. since the beginning of the 2000s, in line
with the euro area performance. Growth was driven partly by strong investment (with an
average increase of 3.3% p.a. versus 2.5% for the euro area) and partly by a recovery of
employment (with 1.7 million net jobs created).
The French economy benefits from a dynamic productive fabric and is highly attractive to
foreign investors. In 2007, 321,000 new businesses were created, 1.5 times as many as in
2000. During this same period France received the largest amount of foreign direct investment
of any OECD country, just behind the United States and the United Kingdom.
This said, the growth rate could be significantly higher, as noted in the report of the
Commission pour la Libération de la Croissance Française, the Commission appointed to
reflect on ways to lift restrictions to French growth. Business growth - particularly in the
segment of small and medium-sized enterprises (SMEs) - would benefit from a more
attractive regulatory and financial environment. In certain sectors - such as the service and
retail sectors - competition seems weak compared with other countries. Increased competition
would stimulate innovation, competitiveness and activity in the business community. An IMF
study4 estimates the additional activity generated over time by enhanced competition in the
goods and services market at nearly 9% of GDP. Lastly, while French R&D investment is
high at 2.1% of GDP compared with an EU average of 1.7%, it could be raised and be made
more effective.
The ongoing reforms capitalise on the strengths of the French economy and provide
businesses with a more attractive environment for growth, financing, competition and
innovation purposes. The backbone of this strategy is the Economic Modernisation Act of
4 August 200856. Implementation of these reforms will be especially necessary if the
worsening economic outlook observed in the autumn of 2008 continues.
France's industrial policy covers many areas. While competitive clusters are its most visible
aspect, it embraces all innovation, training and business support mechanisms. At the same
time, one of the government's top priorities is a sustainable development strategy which
provides France with growth opportunities.
Facilitating business growth
A highly performing economy which creates wealth and jobs calls for a dynamic business community.
Facilitating business growth is one of the keynotes of France's long-term growth and employment strategy.
Since the beginning of the 2000s, the creation of new businesses has enjoyed a strong momentum (see
chart). But new businesses can only reach the size needed to conduct innovative projects or to break into
foreign markets if their growth is not hampered. This strategy requires initiatives to stimulate the creation
of new activities, but also simplification of company law and a reform of our legislation method.
4
“Structural Reforms in the Euro Area: Economic Impact and Role of Synchronization Across Markets and
Countries”, L.Everaert and W.Schule, IMF Working Paper WP/06/137
5
The French legal texts to which this document refers are available on http://www.legifrance.gouv.fr/
6
http://www.modernisationeconomie.fr/
6
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Rallying entrepreneurs, stimulating the creation of activities
Vigorous business start-ups in France is a strength which needs to be nurtured by
supporting entrepreneurship. We need to develop helpful policies for SMEs and step
up enterprise education initiatives.
Chart: Number of new businesses per year
Source: INSEE, directory of businesses and establishments (Sirene).
A strategy to
provide grassroots
enterprise
education
According to the Financial Times, two French business schools are among the three
best in Europe, demonstrating the excellence of French business education7. To
maintain our excellence, the government has taken and continues to take measures
designed to encourage the development of an economic culture combining business
knowledge, entrepreneurship and an innovative mindset among young people. These
measures include the creation of the Conseil pour la Diffusion de la Culture
Economique (CODICE - Economic Culture Dissemination Council) reporting to the
Minister for the Economy, Industry and Employment, the introduction of study
option DP3 (guidance on career choices) in junior high school, the development of
micro-enterprises at senior high-school level in partnership with the Entreprendre
pour Apprendre (Entrepreneurial Learning Initiatives) association, and actions to
promote interest by upper secondary education level students in innovative
entrepreneurship, in line with the recommendations in the Bécard report of April
2007. The Observatoire des Pratiques Pédagogiques en Entrepreneurariat (OPPE Observatory of Educational Practices in Entrepreneurship) lists more than 400
actions at all levels of the French education system to develop initiative among
young people, to prepare them better for personal and professional projects and even
to teach them how to set up a business.
An attractive
environment for
SMEs
One of the main objectives of the Economic Modernisation Act of 4 August 2008
("LME") is to simplify the life of entrepreneurs, to stimulate the creation of activities
in general and to promote the development of SMEs within the framework of the
European Small Business Act, expected to be adopted by the European Council by
the end of 2008. This Act, whose provisions are explained in the following
paragraphs, will stimulate growth and employment, free up energy and benefit all
economic operators, including SMEs, innovative businesses, business creators,
company buyers, and investors:
• SMEs: the planned simplification measures are designed to facilitate
management of SMEs and small businesses, particularly by simplifying the
company law applicable to SMEs, extending social security and tax rulings,
smoothing the impact of financial thresholds and reducing payment times
7
http://rankings.ft.com/european-business-school-rankings
France National Reform Programme, 2008–2010
7
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
•
•
•
•
(initially capped at 60 days (45 days after the end of the month) and
subsequently negotiated separately in each sector).
Innovative businesses: public sector procurers will be given incentives to
facilitate participation of innovative SMEs in public procurement contracts
and legal certainty will be improved by developing ruling procedures (binding
guarantees on the part of the government), particularly for research tax credits.
Business creators and small entrepreneurs: the formalities involved in starting
your own business will be simplified. Tax and social security constraints in
particular will be eased. For entrepreneurs with the tax status of a
micro-enterprise (turnover of up to €32,000 or up to €80,000 in the case of a
purchase or sales activity) the social security charges will be strictly
proportional to their turnover.
Company buyers: in order to keep shareholders interested in SMEs and to
encourage acquisitions, particularly by family members or employees, transfer
duties will be significantly lowered. Moreover, duties on the sale of businesses
have been reduced.
Investors: finance law and procedures - especially on venture capital and
impatriates - have been modernised to make such investments more attractive.
Lastly, in order to help SMEs obtain financing in the current troubled financial
environment, the government decided on 2 October 2008 to increase OSEO8's budget
in 2008 and 2009:
• boosting OSEO's lending capacity by 50% by arranging an attractive new
refinancing facility of €2 billion for OSEO with Caisse des Dépôts et
Consignations.
• adding €2 billion to the amount of guarantees granted by OSEO for bank loans
to SMEs in order to guarantee an additional €1 billion in loans p.a. compared
with the original budget.
Moreover, an appropriation of €70 million will be earmarked for a special fund set
up to guarantee the medium- and long-term consolidation of short-term loans to
SMEs; this fund will be able to guarantee €1 billion worth of loans.
Transposing the European Small Business Act into French law
The Small Business Act (SBA) proposed by the European Commission has identified 10 common principles
intended to guide the action proposals of the Member States towards stronger synergies between Community and
national action. The French government has launched a series of initiatives to implement this ambitious strategic
agenda. Several provisions in the Economic Modernisation Act of 4 August 2008 ("LME") have been adopted in
direct response to the actions proposed in the SBA, including measures:
• facilitating the acquisition and transfer of businesses, and encouraging the settlement of foreign top
managers in France (Principle I of the SBA – Create an environment in which entrepreneurs and family
businesses can thrive and entrepreneurship is rewarded);
• reforming the law on businesses in difficulty and permitting reintegration through business creation by
reforming the law on the legal incapacity to do business (Principle II – Ensure that honest entrepreneurs
who have faced bankruptcy quickly get a second chance);
• creating a simplified status for self-entrepreneurs (only a declaration), simplifying the law on SMEs,
ensuring the authorities provide personalised and binding information on taxes and social security
8
See the paragraph on OSEO, p. 26.
8
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
contributions, creating a public statistics authority reducing the impact of financial thresholds and
categorising businesses9 (Principle III – Design rules according to the “Think Small First” principle when
designing legislation and simplifying the existing regulatory environment);
• modernising venture capital instruments (Principle VI - Facilitate SMEs’ access to finance).
Other initiatives included in the policy for SMEs also reflect the SBA recommendations, such as:
10
• the dissemination of an "entrepreneurial culture" at junior and senior high schools (Principle I –Stepping
up cooperation with the business community);
• the preparation (in the pipeline since 2007) of measures for managers wanting to set up a new business
after failure, particularly in order to improve the banking status of such loan applicants and to facilitate the
withdrawal of management bans by the Commercial Court (Principle II – Making sure that re-starters are
treated on an equal footing with new start-ups);
• tax measures for SMEs, particularly measures dealing with the status of high-growth SMEs and aid for
innovative start-ups known in French as Aide pour les jeunes enterprises innovantes (APJEI)11 (Principle
III- Using specific measures for small and micro-enterprises, such as derogations, transition periods and
exemptions);
12
• measures to simplify and reduce administrative burdens and measures based on the Economic
Modernisation Act of 4 August 2008, such as shorter payment times and a pilot project to smoothen the
financial impact for SMEs which cross the threshold of 10 or 20 employees (Principle IV – Making public
administrations responsive to SME needs)
• measures to mainstream the SME Pact in order to help high-tech SMEs to obtain public procurement
contracts. The 2006 amendment of the French Public Procurement Code improved allocation of public
procurement, introduced the right of subcontracting and simplified the rules (Principle V);
• The Act of 21 August 2007 on Work, Employment and Purchasing Power (the "loi TEPA") introduced the
right to invest part of wealth tax in the capital of SMEs (Principle VI - Ensure that the taxation of
corporate profits encourages investment);
• The French standardisation organisation AFNOR is developing actions to promote the use of standards by
SMEs and very small enterprises, including a dedicated web site created in May 2008:
http://www.afnor.org/artisans-et-tpe/default.htm (Principle VII – Carry out promotion and information
campaigns to encourage SMEs to make better use of standards);
• as part of the competitive cluster strategy, a call for projects intended to promote cooperation between
SMEs and large companies to allow SMEs to participate in European R&D programmes. Bilateral
technological cooperation with partners from non-European countries was initiated in 2007 (Principle VIII
– Encourage coaching of SMEs by large companies in order to bring them to international markets);
• The Grenelle 1 bill provides for the implementation of loan guarantee mechanisms to support SME
projects for sustainable development and for support - including with tax breaks – for SMEs which embark
on the environmental certification process (Principle IX - Enable SMEs to turn environmental challenges
into opportunities);
13
• the implementation of 10 measures announced in February 2008 to support the export strategies of
French businesses and SMEs, including initiatives to make Coface and Ubifrance more effective, to
strengthen sector action plans, etc. (Principle X – Encourage and support SMEs to benefit from the growth
of markets).
Continued application of the European SBA's recommendations in favour of SMEs will remain a priority policy
for the French government in the years ahead.
9
For statistical and economic analysis purposes, enterprises may be divided into four categories: micro-enterprises; small and
medium-sized enterprises, mid-sized companies, large companies.
10
See http://blog.100000entrepreneurs.com/ and http://www.education.gouv.fr/cid4225/operation-100000-entrepreneurspromouvoir-l-esprit-d-entreprise-dans-les-etablissements-scolaires.html
11
An evaluation of the impact of this mechanism is underway.
See the paragraph on Better Regulation, p. 10
13
http://www.minefe.gouv.fr/discours-presse/discourscommuniques_finances.php?type=communique&id=1187&rub=1
12
France National Reform Programme, 2008–2010
9
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Simplifying company law
Company law is an integral part of the legal and tax environment of economic
activities. Its improvement and modernisation are therefore necessary to build an
attractive and competitive investment environment. Several recent reforms have
simplified company operation. These are in addition to the review of corporate
governance, resulting from the transposition of Directive 2006/56/EC of 14 June
2006, examined by Parliament in the bill adapting French company law to
Community law. This new text creates the obligation for sociétés anonymes (public
limited companies) offering shares to the public to make a declaration about their
corporate governance code and to explain as necessary why they are not in
compliance with certain governance recommendations.
Simplified
operation for SARL
private limited
companies and SAS
simplified joint
stock companies
Simplified public
share offerings
The Economic Modernisation Act (LME) includes several company law reforms.
It simplifies the creation of sociétés à responsabilité limité (SARL - private limited
companies) by reducing legal publication formalities and by introducing the right to
use videoconference facilities at shareholder meetings.
It also simplifies the law for sociétés par actions simplifiées (SAS - simplified joint
stock companies) by releasing the smallest companies from the obligation to appoint
a company auditor, by eliminating the obligation to publish voting rights on an
annual basis and by authorising capital investments in the form of labour (i.e. work
the shareholder agrees to perform for the company).
The LME reforms public share offerings to make the Paris marketplace more
attractive and to make French issuers more competitive. This is done by aligning the
financial information framework with the European directives and by remedying the
legal uncertainty arising from the unclear status of companies making public share
offerings, particularly withdrawal of offerings whose outcome seems uncertain.
Better regulation
The EU Better Regulation initiative is part of the Lisbon Strategy. Its purpose is to
simplify and improve existing regulations, to improve the design of new regulations
and to strengthen regulatory compliance and effectiveness, in line with the EU
principle of proportionality.
Launched since 2003 under an inter-institutional agreement which sets out the
common commitments and objectives of the European institutions, this initiative was
followed in March and October 2005 by two Commission communications on
improvement of the regulatory environment to promote growth and employment, in
2006 by a first strategic review of the Better Regulation programme and in 2008 by a
second strategic review.
The Better Regulation initiative covers several aspects, particularly the simplification
of legal texts, the reduction of administrative burdens and impact assessments.
10
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Streamlined law,
particularly in
favour of SMEs
In addition to the Economic Modernisation Act, which includes several provisions
intended to improve the operation of SMEs14, the law of 20 December 2007 on
regulatory simplification has eased a number of constraints for businesses, private
citizens and local governments including the organisation of one-stop shops for
employment, taxes and innovative businesses, the right for the courts to use
videoconferencing methods, the possibility for lawyers to access their civil and
administrative cases online and the dematerialisation of local government accounts.
Special attention is paid to procedures. This is reflected in the launch of ten major egovernment programmes and the appointment of a committee responsible for
absolishing obsolete laws and regulations and streamlining administrative
procedures. Lastly, the online availability of public services has done much to help
simplify the procedures.
Simplifying and transposing the Services Directive
The aim of this directive is to establish a genuine internal market in services. This sector accounts for
70% of the European economy. To achieve this goal, the directive introduces a legal framework which
strengthens consumer confidence and eliminates obstacles to the freedom of establishment for service
providers and to the freedom to provide services between Member States.
The reform of the legal framework for services also creates an opportunity to simplify business
formalities significantly and to encourage economic initiatives. The Member States have 3 years from
publication to transpose the Directive, i.e. until 28 December 2009. This Directive is cross-functional
and it is therefore an extremely ambitious objective. According to an initial estimate, it will affect at
least 5000 laws and regulations in the Member States.
Organising the transposition
Owing to the scope of the work ahead and the sphere of activities covered by the Directive, the French
authorities have adopted a special transposition mechanism under the auspices of a taskforce
responsible for supervising the necessary preparations. This taskforce, which reports to the Ministry
for the Economy, Industry and Employment, relies on a large network of correspondents at all
government administrations concerned.
Reviewing authorisation rules and adapting laws and regulations
The first step was to identify national authorisation rules falling within the scope of the directive and
to evaluate their compatibility with its provisions. This phase has now been completed. The report to
be sent in late 2009 to the European Commission and to our partners remains to be drafted and will
factor in ongoing reforms.
The second, legal step is to adjust certain authorisation rules by means of legislative and/or regulatory
amendments. Certain legislative and regulatory reforms required for transposition purposes were
already adopted in 2008 or well underway, such as the reform of commercial town planning
procedures, the profession of judicial officers responsible for representing clients and providing them
with advice before the courts of appeal (avoués), and the organisation of the tour operator industry.
Setting up one-stop shops
Within the framework of the Economic Modernisation Act it was decided to base the French one-stop
shop system on the existing network of Centres de Formalités des Entreprises (CFE, business
formality centres) which already facilitates the paperwork required to start a new business.
The authorities and the chambers of commerce responsible for CFEs have begun talks to lay the
groundwork for the one-stop shop system (the implementation decree is scheduled to be published
14
See the paragraph on An attractive environment for SMEs, p 7
France National Reform Programme, 2008–2010
11
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
before 31 December 2008). The technical work needed to adjust the existing system to the directive's
new requirements has already been launched to ensure that the developments of the planned pilot
project can be implemented during 2009.
Implementing the Internal Market Information (IMI) system
The "IMI" system became operational at the start of 2008. This administrative cooperation system was
set up by the European Commission to allow Member State administrations to exchange information
connected with requests for recognition of professional qualifications in four regulated professions. At
the beginning of 2010 it will be extended to permit information exchanges on requests presented by
service providers. The list of sectors to be included in the pilot project will be agreed between the
Member States and the Commission at the beginning of the third quarter of 2008, after which the
competent government authorities will have to be registered and networked.
A reduced
administrative
burden
France has ambitious plans for reducing administrative burdens. Its target is to
reduce the burden of the 1,000 most cumbersome and irritating business obligations
by 25% between now and 2011, beyond the European Commission's action plan.
Moreover, the French e-government strategy is consistent with the European i2010
action plan, one of whose priorities is to reduce the administrative burden.
The French methodology is an enriched version of the Standard Cost Model used by
the EU Member States, since it not only covers the administrative burdens of
businesses but also those of the general government. Moreover, it factors in the cost
generated by government reply times.
In practice, 250 simplification plans will be implemented. After two waves in 2006
and 2007, 189 obligations were reviewed during the third wave in the first half of
2008. 71 of these were singled out for re-engineering workshops held to develop
simplification plans. In 2008, administrative burdens will be addressed at national
level in the following areas: public procurement, statistics, personal services, legal
notices, export sales and company law.
Access to law
Easier access to the law is a key ingredient of the Better Regulation strategy. France's
economic performance requires the law system to be more transparent and accessible
for our fellow-citizens and businesses. To help achieve this, a new version of the
Légifrance website was put online in 2008. This charge-free website provides the
public with most of the existing normative acts in consolidated format (Constitution,
codes, laws, regulatory acts issued by central government authorities and acts
reflecting France's international commitments, including the directives and
regulations disseminated by the European institutions themselves). It also gives
access to several databases with constitutional, judicial, administrative and European
legal opinion and case law and provides links to several other public information
websites. Lastly, website users are offered a free daily email subscription to Journal
Officiel de la République, the French government gazette.
Efforts to optimise dissemination of European law are also continuing at the
European level in conjunction with the Office of Official Publications of the
European Communities.
12
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Impact assessment
The work underway since 2006 on ways to prepare key legislative reforms culminated in the adoption
by the Congress of Constitutional Law of 23 July 2008 on the modernisation of political institutions.
This law radically reforms legislative procedure, particularly Article 15, which sets out the basic
framework for the presentation of law bills (now part of Article 39 of the Constitution). The scope
and sphere of presentation prerequisites will have to be specified in the constitutional provisions
which are to be adopted in the months ahead to permit the implementation of this innovative
mechanism. Under Article 39 of the newly worded Constitution, violation of these rules will be
penalised politically by postponement of a bill's inclusion in the parliamentary agenda. It may even be
punished legally since the Constitutional Council may be requested to settle disagreements between
Parliament and the Prime Minister on compliance with prerequisites.
This new constitutional framework will breathe new life in the practice of impact assessments, whose
methodology and tools have been overhauled during the last two years. As set out in Article 42 of the
bill implementing the Environment Round Table (Grenelle de l'Environnement) conclusions,
submitted on 11 June 2008 to Parliament, the objective is to "make sure law bills are presented
together with an assessment of the economic, social and environmental impact of the planned
provisions". The French government has already based many reforms on the feedback from broadly
disseminated policy documents. This method was inter alia used for the social reforms, with the
systematic consultation of the social partners under the act of 31 January 2007 on the Modernisation
of the Social Dialogue. It has also been used for many other reforms, such as the online publication of
green and white papers (working solidarity benefit, initiatives to unshackle growth, defence, the civil
service, etc.) The dissemination of impact assessments will also have to be reviewed since such
assessments will have to be submitted to Parliament.
Improving the financing of the economy
Given the current financial turmoil, it is more necessary than ever to continue the European and national
initiatives to restore financial stability. The first priority is to restore confidence within our financial
system, which will allow it to fulfil its principal duty, i.e. to finance the economy. This basic task, which is
a sine qua non for the structural reforms presented below, should not make us forget that an efficient
financial system makes a vital contribution to growth and jobs.
The government has also launched an institutionally organised reflection on ways to improve the operation
of the French financial marketplace. The idea is to make this marketplace more attractive in order to draw
savings to France. Business financing - particularly SME financing - will benefit from the reform of
payment times and venture capital rules as well as the support plan announced on 2 October 2008 by the
government. The plan provides for an increase in the budget for OSEO, a public financial institution
specialised in SME financing, and the use of an additional part of revenue from certain regulated savings
passbooks to finance SMEs. France will also benefit from the EIB funds approved at European level in
September 2008.
Making the French financial marketplace more attractive
The Markets in Financial Instruments Directive Markets (MiFID), which came into
force on 1 November 2007, boosted competition in the European stock market
landscape. This development makes it vital to increase the attractiveness of the
French financial marketplace. In order to identify the main issues of the French
financial marketplace and the reform areas to be promoted, the Paris Financial
France National Reform Programme, 2008–2010
13
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Services High Level Committee (Haut Comité de Place) was created in October
2007, whose members include government and industry representatives.
The aims are inter alia to make Paris an international listing benchmark for
companies of all sizes, to strengthen the French collective investment management
market and to make the law on intermediaries more competitive. The High Level
Committee has examined reform paths and the market has been consulted according
to the principle of transparency. Pursuant to the Economic Modernisation Act, the
government will issue government orders to implement the financial regulation
reforms before the end of the year.
In addition to regulatory reforms, a number of other reforms are in the pipeline,
which will be implemented in the coming years. These include reforms dealing with
infrastructures and the conditions under which foreign talents may reside in France.
Reducing payment times
Trade credits represent almost €600 billion in France. Such credit is frequently
caused by the relatively long time companies take to pay. With an average payment
time of 70 days in France (against an average of 58 days in Europe) nearly 30% of all
trade payables and receivables settled after 60 days or more, existing payment
conditions are unsatisfactory. This situation is liable to affect the growth of SMEs,
which face cash shortages or difficulties in obtaining additional financing.
The Economic Modernisation Act (LME) provides for the gradual implementation of
strict rules intended to shorten payment times, capped at 60 days (45 days after the
end of the month) from 1 January 2009 or an even shorter deadline, depending upon
the outcome of sector negotiations. Stiffer late-payment penalties will be applied to
make them more dissuasive and non-compliance with payment deadlines will be
easier to bring before the civil courts.
Creating endowment funds, increasing venture capital
Private equity, used by investors to buy into a company's capital, is an important
source of financing for unlisted businesses. According to Association Française des
Investisseurs en Capital (AFIC), French private equity players invested nearly €12.6
billion in over 1,500 businesses in 2007. In order to facilitate access of high-growth
companies to these equity resources, France's policy is to promote private equity,
especially in the growth and venture capital segments. According to AFIC, French
venture capital investments accounted for about €680 million in 2007, up 25% from
2006.
France
Investissement
France Investissement was launched at the end of 2006 to support the development
of seed, venture and growth capital. Its objective is to arrange over the next 6 years
€2.5 to €3 billion in public funds (Caisse des Dépôts) and private capital for highgrowth businesses.
An end-2007 review showed that funding volumes and positioning were satisfactory:
the five funds of funds set up by private partners (AGF, Caisse d’Épargne group,
Groupama, Natixis and Société Générale) had been operational for several months.
As at 31 December 2007, the private partners were committed to €230 million while
Caisse des Dépôts had agreed to invest €587 million, i.e. a total of €817 million.
14
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
New tax measures
for venture capital
investments
In 2007 France implemented new tax measures to support the development and use
of venture capital instruments. The idea was to give private citizens an incentive to
invest part of their savings in venture capital funds. The Law Promoting Work,
Employment and Purchasing Power (TEPA - Loi en faveur du Travail, de l’Emploi
et du Pouvoir d'Achat) of 21 August 2007 allows payers of wealth tax to reduce this
tax when investing in SMEs, whether directly or through local investment funds (FIP
- Fonds d’Investissement de Proximité). This measure was conditionally extended to
venture capital funds (FCPR - Fonds Communs de Placement à Risques) and to
innovation investment funds (FCPI - Fonds Communs de Placement dans
l’Innovation) by the Supplementary Budget Act of 25 December 2007. By the end of
May 2008, the financial market authority (Autorité des Marchés Financiers – AMF)
had already approved 12 FIPs and 16 FCPIs whose investors pay reduced wealth tax.
In the first year of the measure, €1 billion were invested directly or indirectly in the
capital of SMEs.
Contractual
venture capital
funds
In order to promote investment in SMEs, the Economic Modernisation Act has
created a new private equity vehicle, the contractual venture capital fund (FCPR
Contractuel). The purpose of this fund, which is reserved for qualified investors, is to
enlarge the sphere of private equity management strategies. The regulations of an
FCPR Contractuel are a contractual document and can inter alia be used to impose
investment rules (strategy, control, ownership structure and debt ratios) and to
stipulate the period during which shares cannot be redeemed.
Stimulating competition
Competition stimulates activity, competitiveness and business innovation, drives prices down and thereby
increases purchasing power. Competition does away with monopoly rents and so guarantees a fair balance
between an entrepreneur's remuneration and what is paid by the consumer. At a time of rapidly rising
energy and food prices, stronger competition also limits the impact of this inflationary shock on purchasing
power.
In certain major sectors of the French economy, especially the retail sector, competition seems weak
compared with other major developed countries15. This has been remedied by the recent Economic
Modernisation Act ("LME"). Similarly, competition between banks has been upgraded. The Council of the
European Union has advised France to improve the framework governing competition in the gas and
electricity sectors and to take new measures to strengthen competition between the incumbent rail freight
operator and its competitors. The Council also wants France to continue strengthening competition in
regulated sectors and professions.
Establishing a competition authority with increased powers
A more transparent
and effective
competition
regulation system
in France
Anti-competitive practices (abuse of dominant positions, cartels) lead to large losses
of purchasing power for the consumer. Such practices affect all sectors and must
therefore be investigated and strictly punished. Mergers and amalgamations between
businesses should be examined on an ex-ante basis to make sure they do not hurt
competition. The French institutional system with its two competition authorities has
been adjusted to the new environment after 20 years in operation.
15
Competition within sectors in France, TRÉSOR-ÉCONOMICS – No. 27 – January 2008, Romain BOUIS
(http://www.minefi.gouv.fr/directions_services/dgtpe/TRESOR_ECO/anglais/pdf/2008-001-27en.pdf)
France National Reform Programme, 2008–2010
15
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
The Economic Modernisation Act transforms the existing Competition Council into
the Competition Authority with extensive powers and increased resources. In the
future, only the Competition Authority will supervise mergers and amalgamations.
The Minister for the Economy will preserve the power to examine particular cases
affecting the general interest, as in Germany. The Competition Authority will have
its own investigators and more authority over the personnel of the Competition
Directorate, who may be put at its disposal in order to assist investigations. At its
own initiative, the Authority may also issue opinions and recommendations in all
matters relating to competition. The Minister for the Economy will preserve the right
to refer anti-competitive practices to the Competition Authority and the power to
investigate strictly local anti-competitive practices. The modernised and enriched
powers of this Authority and their link with the powers of the Minister for the
Economy will be specified in a government order which will be adopted in the
beginning of December 2008. This reform will take effect no later than 1 January
2009.
Boosting competition in the retail sector
The retail sector is an important segment of the French economy, accounting for
almost 7% of jobs. It is also a sector where competition seems less pronounced than
in comparable countries. The employment rate in this sector and the market share of
hard discounters are lower than in other European countries, margins seem to have
increased between 1995 and 2002, while the market share of the four largest mass
retailers has also increased.
The Economic Modernisation Act of 4 August 2008 is the final step in the legal
reform of business relationships, launched by the law of 2 August 2005 in favour of
small and medium-sized enterprises and extended by the law of 3 January 2008 on
initiatives to develop competition to the benefit of consumers. These successive
reforms affect listing fees, commercial negotiations and most recently the
establishment of new shops. They have therefore strengthened competition in this
sector and will have a cumulative impact on both employment and purchasing power.
Easier establishment of new shops and the resulting gains in purchasing power
should boost the creation of new jobs. The IMF estimates the gain in purchasing
power at €1,000 per household p.a16.
Freedom for
distributors and
suppliers to
negotiate rates and
better punishment
of abuses
The Economic Modernisation Act (LME) provides for more competitive business
relations by allowing suppliers to differentiate between the prices granted to retailers.
A supplier may not only adjust its published general sales terms to each buyer
category, it may also agree, in all confidentiality, special sales conditions with
retailers. This provision is expected to strengthen competition between brands (i.e.
between suppliers) and within brands (between retailers) in the interest of the
consumer. In practice, this mechanism should limit listing fees to genuine
commercial cooperation services between suppliers and retailers, as in other
European countries. A more dissuasive penalty system will be implemented to
prevent abuse of dominant purchasing and sales positions.
Easier promotional
campaigns and
discount sales
The LME makes it easier to conduct promotional campaigns and discount sales
actions, particularly by allowing two weeks of discount sales at the retailer's
discretion and by liberalising clearance sales prices throughout the year (i.e. two
16
France — 2008 Staff Visit, Concluding Statement, http://www.imf.org/external/np/ms/2008/071108.htm
16
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
“floating” weeks and two fixed periods of five weeks instead of two fixed periods of
six weeks).
A simplified way to
establish new retail
businesses
The Economic Modernisation Act makes it easier to establish new retail businesses
while giving mayors the power to keep shop opening plans consistent with town
planning and sustainable development objectives. The authorisation activation
threshold has been raised from 300 to 1,000 sq.m. - subject to the obligation to apply
for a permit in a few special cases - in order to make it easier to establish new
brands. The application review procedure has been simplified and minimised and the
membership of département (district) commissions responsible for examining plans
has also been reformed. Lastly, mayors will have the right to refer cases to the
Competition Authority when operators of commercial facilities abuse a dominant
position.
Strengthening gas and electricity competition
Pursuant to the European Directives, the French government has radically
overhauled the gas and electricity markets, which have been entirely liberalised since
1 July 2007.
The legal and management sides of monopoly activities (network infrastructures)
have been unbundled vis-à-vis competitive activities (production, purchasing). Their
regulation has been entrusted to an independent, specialised regulatory authority, the
Energy Regulatory Commission (Commission de Régulation de l’Energie), which
oversees effective market competition, particularly by guaranteeing nondiscriminatory access to systems (see box).
Strengthening gas and electricity competition
Entirely liberalised electricity and gas markets since 1 July 2007
The electricity and gas markets have been entirely deregulated since 1 July 2007 (and open to
residential consumers under the law of 7 December 2006). In order to facilitate this complete
liberalisation, the following consumer protection measures have been adopted:
• provisions on energy supply contracts have been introduced in the Consumer Code (particularly
including transposition of Annex A of the Directives of 26 June 2003, the creation of Section 12 in
the Consumer Code [Articles L 121-86 et seq.] by the law of 7 December 2006)
• mechanisms for vulnerable consumers have been implemented (rate for basic electricity needs,
created by Decree 2004-325 of 8 April 2004, and subsidised gas rate, whose decree was published
on 14 August 2008).
Electricity and gas transmission
The electricity transmission activity is carried on by a business – RTE – which is legally unbundled
from businesses with competitive electricity-related activities (effective from 1 September 2005).
Gas transmission companies are legally unbundled from commercial gas undertakings: GRTgaz and
TIGF. TIGF also operates two storage sites in accordance with the structure allowed by the Directives.
The legal unbundling obligations are tied to measures intended to guarantee the "management"
independence of transmission operators. These mechanisms are inter alia provided for by the law of
9 August 2004 on the public service in electricity and gas and on electricity and gas companies
(Article 15): rules on management independence, institution of codes of good conduct, provisions on
articles of association, involvement of the Energy Regulatory Commission (Commission de Régulation
de l’Energie - CRE).
France National Reform Programme, 2008–2010
17
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Interconnection capacity allocation conditions for cross-border electricity trade will be implemented in
accordance with EC regulation No. 1228/2003 of 26 June 2003: auction mechanisms implemented
under conditions laid down by or under the regulator, the Energy Regulatory Commission (CRE).
Electricity and gas distribution
Pursuant to the Directives, management unbundling obligations apply to the management of electricity
and gas distribution systems which serve more than 100,000 customers. Legal unbundling obligations
have been transposed by the law of 7 December 2006 on the energy sector.
EDF and GDF launched their respective distribution subsidiaries (ERDF and GRDF) in early 2008, as
did six other distributors catering to more than 100,000 customers, including four electricity and two
gas distributors.
Access to the electricity and the gas transmission systems
Access to electricity transmission systems governed by a regulated system, i.e. a system with tariffs
laid down at the proposal of the CRE, an independent and specialised regulation authority.
Access to the gas transmission network is organised transparently and without discrimination in favour
of all shippers with a supply authorisation or a transit contract. The tariff scale is based on an "in-out"
system recommended by the Madrid Forum. Access tariffs for transmission and distribution systems
and LNG facilities have been implemented at the regulator's proposal and are regularly updated and
adapted.
A 10-year indicative plan describing the development of infrastructures and changes in natural gas
demand was worked out and sent to Parliament in April 2007. This plan provides in particular for
investments to improve interconnections with France's European partners (Spain, Germany, etc.).
France is currently updating its gas and electricity investment programmes.
The operation of LNG terminals requires construction and operation authorisations. Three LNG
investment projects have been publicly debated. A new terminal (Fos Cavaou) will be inaugurated
during the second semester of 2008 and the Montoir terminal for methane tankers is being enlarged.
Lastly, underground gas storage requires authorisation from the Minister for Energy. Gaz de France
and TIGF operate 15 underground gas storage facilities and have since 2004 provided transparent and
non-discriminatory access to their infrastructures for all authorised suppliers.
More than 17 suppliers have storage access contracts in TIGF or Gaz de France zones.
Operators have taken many measures to facilitate access to their infrastructures, such as the
development of auction procedures to stimulate the construction of new gas pipelines and storage
facilities, and the creation of secondary transmission or storage capacity markets. These measures are
supplemented by the gas release programme to promote competition in south and south-west France
and the sale of installed capacities (Virtual Power Plants) in the electricity sector. In the electricity
segment, EDF has made available 6,000 MW (6% of the installed capacity and an energy volume of 42
TWh/year). Further to the complaint filed by Direct Energie, the Competition Council, which observed
a squeeze between regulated tariffs and market prices for small business customers, decided on 10
December 2007 to oblige EDF to auction off 10.5 TWh p.a. for five years with a 10-year extension
option.
Regulation
The Energy Regulatory Commission (CRE) is an independent government authority created in 2000
and organised under the laws of 10 February 2000, 3 January 2003 and 7 December 2006.
Pursuant to the law, the CRE "contributes to the efficient operation of the electricity and natural gas
markets for the benefit of the end consumer".
Within this general framework, the CRE is responsible for guaranteeing transparent and
non-discriminatory access to gas and electricity transmission and distribution grids/networks, liquefied
natural gas (LNG) and gas storage infrastructures. To perform its brief, the CRE proposes tariffs for
18
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
using transmission and distribution systems to the government. The CRE's Comité de Règlement des
Différends et des Sanctions (CoRDIS – the dispute settlement and sanctions committee) settles grid or
network access disputes.
The CRE monitors the successful development and operation of grids/networks. As part of this
mission, the CRE approves the investment programmes of electricity and natural gas transmission
system operators. It also approves the principles of legal and accounting unbundling between
transmission, supply and distribution activities. Every year, it publishes a report on compliance with
codes of good conduct and the independence of electricity grid and natural gas network operators.
The CRE is further responsible for monitoring transactions on wholesale markets (whether organised
or OTC) and for supervising cross-border trade. The CRE takes part in implementation of public
service missions laid down by law.
Finally, the CRE maintains regular contacts with various European Community institutions and
contributes to coordinating France's positions on matters related to electricity and gas market
regulation.
Improving the efficiency of rail freight transport
Rail freight aligns with sustainable development and energy efficiency objectives.
One of the government's objectives, adopted as part of the Grenelle de
l’Environnement initiative, is to increase the market share of non-road freight traffic
by 25% between now and 2012. Moreover, one of the Council of the European
Union's recommendations is to strengthen competition between the incumbent rail
freight operator and its competitors. Rail freight has been fully liberalised on the
domestic and international markets since 31 March 2006, which has sparked rapid
growth of the market share of new entrants (4.7% in tonnes kilometre transported in
2007).
The government has proposed a bill creating the Commission de Régulation des
Activités Ferroviaires (Rail Activities Regulatory Commission). This autonomous
and independent regulator will promote the emergence of stable and transparent rules
which in turn are expected to promote the growth of the railway sector. Growth of
the rail freight market further will be obtained by support for combined rail/road
traffic, the creation of a priority freight network and a reform of railway tariffs in
order to reserve freight capacities. Combined rail/road traffic will be encouraged
with operational assistance, assistance with the launch of new services and
investment assistance (see box).
France National Reform Programme, 2008–2010
19
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Developing rail freight transport
As part of the Grenelle de l’Environnement Round Table, the French government has set ambitious
objectives, including a 25% increase in the market share of non-road freight traffic by 2012, i.e. a
roughly 45% increase in railway traffic. Achieving this target involves several measures: support for
combined rail/road transport, improvement of freight slots, the creation of a railway supervisory
authority with extensive powers and the creation of a network on which freight traffic has priority.
Liberalisation of the rail freight market
France authorised competition for international freight services on 7 March 2003 and for its domestic
rail service on 31 March 2006, ahead of the deadline set by Directive 2004/51/EC of 1 January 2007.
Moreover, other candidates than railway undertakings were authorised to submit applications for
network slots, particularly combined freight carriers and public entities with freight transport services
on the national railway network (e.g. port authorities managing port railways) under
Decree 2008-148. Such candidates may request services adjusted to their needs..
Railway operators wishing to provide freight or passenger services must be in possession of a railway
licence and a safety certificate. In France, railway licences are issued by the Minister in charge of
Transportation. So far, 10 railway licences have been delivered in France. Safety certificates are
delivered by the safety authority, Établissement Public de Sécurité Ferroviaire (EPSF).
Certain Member States (Germany, United Kingdom, Sweden, etc.) have introduced competition well
before the deadline stipulated in the European Directives (91/440/EC, as modified). In Germany, the
market share of new entrants has increased from 3% to 15% in 6 years, accounting for most new
traffic in 2005 and 2006.
A rapidly growing market share for new entrants
France's railway network is already used by seven railway operators other than Fret SNCF, the
historic incumbent. In 2007, new entrants had a combined market share of 4.7% in tonne kilometres
transported. Overall traffic increased by 3.5% in 2007. The ongoing liberalisation drive is expected to
boost activity in 2008.
Creation of a railway regulator, the Commission de Régulation des Activités Ferroviaires
The French government believes that the existence of an autonomous and independent regulator will
establish an atmosphere of confidence among the players and so stimulate the emergence of stable
and transparent rules, similar to those which have helped develop the railway sector in several other
European countries. This is why the government has decided to set up an independent railway
regulator. A bill submitted to the Senate on 10 September 2008, which may be adopted in early 2009,
provides for the creation of the Commission de Régulation des Activités Ferroviaires, an independent
body with considerable authority, including investigation and punishment powers, and its own
budget. This body will also have the right to examine the opening-up of the market for international
passenger services with the regulated cabotage prescribed by the Directive 2007/58/EC, to be
completed no later than 1 January 2010. The above-mentioned bill transposes this opening-up with
effect from 13 December 2009.
Development of combined rail/road traffic
The development of combined transport will continue to be supported during the period from 2008 to
2012 by a programme which provides for operating assistance, assistance with the launch of new
services and an investment assistance tied to traffic and terminal performance commitments. After the
crisis and the restructuring during 2000 and 2006, when traffic slumped by 6% p.a., 2007 brought
renewed growth (13%).
Combined transport is currently the most dynamic rail freight segment. Growth will need to be 12%
20
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
p.a. in order to double combined traffic by 2012. Based on operator forecasts, capital requirements
are estimated at €200 million during the 2008-2012 period, compared with an allocation of €113
million under the previous Budget Act for the 2003-2007 period. The creation of rail highways,
including the Alpine line between Aiton and Orbassano launched in 2003 and the line between
Perpignan and Bettembourg opened in 2007, also enriches the available combined transport services
and makes it possible to transport trucks and trailers alone between two transhipment points of a rail
infrastructure.
Creation of a network giving priority to freight
With regard to the creation of a network giving priority to freight, France supports the European
Commission communication entitled "Towards a rail network giving priority to freight", the subject
of conclusions by the Transport Council on 7 April 2008 in order to grant freight genuine priority in
the main European freight transport corridors. One of the objectives is to define, in an existing
network, a sub-network giving priority to freight in order to provide sufficient quality slots. This
network would make it possible to reorganise slots (intervals and standardisation) and to provide a
high-quality freight service, including during peak hours and in busy zones, tariff compensation and
better quality for new freight services (rail highways, long trains, high-speed freight). This will inter
alia make it possible to grant priority to freight crossing certain nodes.
Rail tariff reform: reserving freight capacity
The principle of the rail tariff reform proposed by the government is to make sure charges cover at
least the marginal cost. For rail freight, this will mean higher charges to reflect real network
utilisation costs. In return, the reform regulations give the infrastructure manager the obligation to
reserve freight capacities in proportion to the revenue generated by this activity. To support this
sector, the French State will pay compensation for the increase in charges. This subsidy may be
adjusted downward once the network and the quality of slots show significant improvement. The
relevant decree has been drafted and is being reviewed by industry players. Its publication is
scheduled in 2008/2009. The decree provides for implementation of the freight infrastructure from
mid-December 2010 onwards. The first requests for slots received in the beginning of 2010 will
therefore benefit from this measure when the schedule is implemented mid-December 2010.
Reforming the French ports
In January 2008, the government launched a plan to revive the French sea ports,
whose activity has been declining. A law adopted on 4 July 2008 provides for the
transfer of port handling activities and machinery to the private sector. Modelled on
the systems used by leading European ports, integrated terminal operators will be
responsible for the entire handling process in the future. The State has approved a
major investment plan to modernise the ports, with an additional budget of
€174 million for the period from 2009 to 2013.
Extending competition in the banking sector
Retail banks are beset by fierce competition in a market where 98% of households
have a bank account. The maturity of this segment is evidenced by the slowly
growing results of the major French retail banks in an environment where no chain
bank holds more than 15% of the consumer credit market.
The French banking industry needed to improve its transparency and the equal
treatment of competitors. This has now been done. The range of financial services of
La Poste, the French post office, has been extended, all banks have been granted the
right to market the Livret A savings passbook, banks may offer to pay interest on
deposits and the transparency of banking rates has been upgraded.
France National Reform Programme, 2008–2010
21
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
The creation of
La Banque Postale
The government has improved competition in the retail banking sector by removing
certain barriers for La Poste, a player with an extremely dense branch network
throughout French territory. La Poste's financial services department was converted
into a fully-fledged credit institution named La Banque Postale and its services were
extended to property loans without prior savings requirements (law of 20 May
2005). In November 2007, the Minister for the Economy, Finance and Employment
further approved the marketing of consumer credit products (tentatively expected to
take effect in 2009), followed in April 2008 by approval of non-life insurance
products.
A Livret A savings
passbook available
at all banks
The Economic Modernisation Act stipulates that the Livret A savings passbook may
be marketed by all banks with effect from 1 January 2009. The Livret A savings
passbook, which could formerly be marketed by only three networks, is widely used
in France. It represented €118.4 billion at the end of 2007, i.e. 3.6% of household
savings and investments. The fact that all banks now have the right to sell this
product should help strengthen competition in the retail banking segment, especially
among young customers. The interest on this savings product is tax exempt.
Moreover, it may be offered to anyone regardless of age, which could provide banks
with an important tool to attract and keep customers.
Improved
transparency of
bank charges and
banking mobility
The Act of 3 January 2008 on the Development of Competition for the benefit of
Consumers provides that banks, effective from January 2009, will be obliged to send
customers an annual statement itemising bank charges relating to their deposit
account. French banks further agreed in May 2008 to begin offering a banking
mobility assistance service, which will be available at all banks from the end of
2009. The purpose of these mechanisms is to stimulate competition by making
tariffs more transparent and by making it easier to switch banks.
Modernising regulated sectors and professions
The authorities continue efforts to ease the regulations governing certain professions,
aware that increased flexibility will stimulate economic activity, generate benefits for
the consumer and boost growth and employment. The Council of the European Union
also wants France to continue intensifying competition in regulated sectors and
professions.
The reform of professional regulations in France is primarily driven by the
transposition, by 31 December 2009, of the Directive on Services in the Internal
Market. While many sector regulations fall outside the scope of the Services
Directive, the reform of many other professions is underway (see box).
Intensifying competition in regulated sectors and professions
A far-reaching reform is underway in the area of regulated professions and sectors. Transposition of
the Services Directive has already resulted in the implementation of legislative changes, e.g. in the
area of commercial town planning. Further legislative measures required by the transposition of the
Services Directive will be presented to Parliament during upcoming sessions. The necessary
regulatory changes are in progress and will be rolled out before the end of 2009.
Over and above the sphere of the professions covered by the Services Directive, the French
government has launched a series of studies to reform certain regulated sectors.
22
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Improving taxi services in French territory
Further to the mission entrusted late 2007 by the Prime Minister to Mr Chassigneux, Prefect, the taxi
sector reform is currently underway.
In May 2008, representatives from the main industry organisations and the Ministry of the Interior
signed an agreement "on the evolution of the taxi profession". The text includes 25 commitments
including provisions to improve availability in French territory and to upgrade customer service
quality. The practical implementation conditions of this agreement are currently under discussion.
Reforming the legal and judicial professions
France wants to make sure the objectives of the Lisbon Strategy are properly combined with the
particular features of the legal professions. The reforms will therefore be conducted in compliance
with the need for good administration of justice, protection of consumers and service beneficiaries
and disclosure obligations. In June 2008, a commission was set up to reflect on ways to create a
general law profession in France. Pending its conclusions, several specific reforms have already been
launched.
On 10 June 2008 it was announced that the profession of avoués17 to the courts of appeal would be
merged with the profession of lawyers. This reform is scheduled to take effect on 1 January 2010.
The elimination of two types of appeal lawyer will simplify access to justice and significantly lower
its cost without jeopardising quality, helped by the fact that new technologies make it easier to submit
case files. Parliament will be asked to vote on this draft reform.
The conditions under which bailiffs may establish offices have also been reformed. Decree No. 2007813 of 11 May 2007 was adopted to encourage and make it easier for professionals to form
partnerships, something which is currently impossible due to the excessively small jurisdictions of the
Tribunaux d’Instance (lower district courts). The purpose is to stimulate competition. This reform
will take effect on 1 January 2009. Its impact will be amplified wherever Tribunaux de Grande
Instance (higher district courts) are merged in response to the overhaul of the judicial map under the
decrees of 17 February 2008. The reform of the judicial map will entail the elimination of 55
Commercial Courts, which will prompt the registrars to these courts to establish partnerships.
It has been agreed to raise the number of notaries by 20% (i.e. 1,800 more). This agreement will be
implemented over a four-year period given the number of graduates available on the market and the
interfaces with other professions.
Lastly, the sector of auction houses is the subject of intense reflection. Mr Béthenod has presented a
report to the Minister of Culture as part of the drive to breathe new life into the art market and to
adapt regulations to the Services Directive. This report proposes to ease the regulations and to adopt
tax measures intended to promote private collections.
Self-service access to certain pharmaceuticals
A Decree published in the Journal Officiel issue of 1 July 2008 authorised the self-service sale of
certain pharmaceuticals at pharmacies in order to promote pricing competition between such
products. Agence Française de Sécurité Sanitaire des Produits de Santé - AFSSAPS, the French
health products safety agency) has drawn up an exhaustive list of more than 200 eligible medicines.
These will be located in a clearly identified reserved area close to the counter to facilitate discussion
with and advice to patients by pharmacists and assistants.
17
An avoué is a judicial officer responsible for representing clients and providing them with advice before the
courts of appeal. He has a monopoly to represent parties before the courts in appeal in all proceedings involving
mandatory representation, as is the case in civil and commercial matters. He is responsible for carrying out all
actions connected with appeal proceedings ("postulation"), to announce his client's claims and to submit an
argument in his name. However, he does not plead.
France National Reform Programme, 2008–2010
23
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Shifting the technological
innovation capacity
frontier
by
strengthening
France is one of the most productive economies. Faced with growing technological competition from the
emerging countries, France's ability to grow and to remain competitive at the forefront of technology
increasingly depends on its capacity to shift the technological frontier.
France's R&D expenditure in 2006 totalled 2.1% of GDP, slightly down from the 2.2% recorded in 2002. In
line with the EU average, total public R&D funding (as a % of GDP) decreased slightly during this period.
However, in contrast with countries like Germany, this decline was not offset by large investments on the
part of the business community or foreign operators. During the same period, the number of times France
was quoted in global scientific publications declined faster than the UK and German share, even if certain
disciplines continued to report excellent figures.
The development of France's innovation capacity calls for direct financial and organisational investments in
research and innovation, the development of the digital economy, stronger ties between science and society,
as well as an effective higher education system based on a high-quality educational system.
Investing more and better in public research
France's objective for R&D investment is 3% of GDP by 2012. The State will
continue to allocate large budgets. The reforms will mainly be intended to ensure that
the resources allocated produce better public research results and promote corporate
research and innovation.
From October 2008 to March 2009 a national research and innovation strategy will
be developed with the participation of all stakeholders. The purpose of this exercise
is to get an overview of research and innovation challenges, to establish priorities, to
align the actions of all players and to optimise allocation of public funding. The idea
is to repeat this exercise every four years.
In the same spirit and in conjunction with the above strategy, the stakeholders will be
consulted before the end of 2008 on a roadmap for very large research infrastructures
planned during the next 15 to 20 years.
Reform of the
research bodies
In order to improve the efficiency of the research agencies, organisational reforms
will be carried out. At the start of 2009, the Centre National de la Recherche
Scientifique (CNRS - National Centre for Scientific Research) will set up institutes
to replace the existing scientific departments. Their distribution will reflect major
scientific issues, important disciplines and key methodologies. The aim of these
institutes will be to coordinate scientific policy programmes in their respective
scientific areas. At the start of 2008 biomedical and health research institutes
coordinated by INSERM were set up with similar missions. Talks are underway with
other players to adjust their sphere. More generally, the actions are intended to
improve integration between universities - at the heart of the new research system and other research bodies. These objectives will apply broadly without losing sight of
the specific features of each discipline.
In order to improve the relevance of internal allocations, research bodies and
universities will all be asked to implement a cost accounting system.
Evaluation of higher
education and
research systems
24
The creation of Agence d’Évaluation de la Recherche et de l’Enseignement
Supérieur (AERES – Research and Higher Education Evaluation Agency) in 2006
and the extension of its functions in 2007 have significantly strengthened the public
research quality evaluation system. The aim is to assess the quality of all public
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
research entities before the end of 2010. AERES' conclusions will be taken into
account to determine the share of research in recurrent funding for each university.
To complement the functions of AERES - which focuses on scientific performance the Ministry of Higher Education and Research plans to develop and implement a
policy to evaluate the economic impact of research programmes according to
international standards.
The Agence
Nationale de la
Recherche
In 2005 the French government set up Agence Nationale de la Recherche (ANR National Research Agency), whose steadily rising budget boosts funding for projectbased research. From 2005 to 2007, ANR financed more than 4,500 projects with an
aggregate budget of about €1.8 billion. The focus will remain on project-based
research financing. This mechanism encourages research in priority areas and
promotes excellence through emulation.
Since 2007, the objective to produce world-class scientific results has also been
pursued by financing 21 theme-based research networks (RTRA and CRTS) with a
total budget of €236 million awarded after calls for project tenders. The aim of these
networks is to carry out projects showcasing scientific excellence.
A new way of
allocating resources
to universities
A new method of allocating resources to universities will be implemented on
1 January 2009. As regards research funding, this new method will pay closer
attention to performance.
The recent capability of universities to develop genuine research policies makes it
necessary to review their partnership relations with the research community. The
government's strategy focuses on the implementation of framework agreements for
common scientific supervision methods, and on the unification and simplification of
management rules for joint laboratories.
Under the law of 11 August 2007 on University Freedoms and Responsibilities
(LRU), the most productive university researchers will be rewarded with access to a
mechanism allowing them to reduce or even to suspend their teaching activities
temporarily.
Stronger links
between science and
society
Lastly, the government will continue initiatives to strengthen the ties between
science and society. The idea is to encourage ownership of knowledge by our fellow
citizens in order to enhance the learning of scientific subjects and to make sure
citizens can participate actively in scientific policy debates. The State will in
particular continue to support the Institut des Hautes Etudes pour la Science et la
Technologie (IHEST, Institute for Higher Science and Technology Studies) set up in
2007, which organises annual course programmes to teach unregistered high-level
students how to disseminate scientific and technical culture.
Transferring knowledge from public research to the business community and providing
support for corporate innovation
In order to achieve the objective of the Lisbon Strategy, it is essential to increase
corporate investment in innovation. The research tax credit (CIR), the main R&D
support mechanism, has therefore been reformed, which will be reflected in a
significantly higher public budget. The competitive clusters and the OSEO group
have also been radically reformed and strengthened. Other reforms (Carnot Label)
are intended to promote the transfer of knowledge from the public to the private
sector.
France National Reform Programme, 2008–2010
25
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Competitive clusters
In 2004, France launched a national competitive cluster policy to make businesses
more competitive, to build up employment on promising markets and to strengthen
the local regions. Competitive clusters pool businesses, research centres and training
institutes in their area in order to generate synergies and cooperation, primarily
through innovative cooperative projects. ANR also encourages the dissemination of
knowledge and the commercialisation of research by promoting collaboration
between research centres and private laboratories.
After three years of activity, France's competitive cluster policy received a
favourable assessment in the report published by independent consultants on 18 June
2008. In view of this positive conclusion, the French government is set to launch the
second phase of this policy for a further three-year period (2009-2011), with a total
budget of €1.5 billion, similar to the appropriation for the period from 2006 to 2008.
Most of this amount will be earmarked for R&D projects, channelled through the
Fonds Unique Interministériel (FUI - single interministerial fund) for competitive
clusters. After the assessment, the label granted to clusters was confirmed for those
which had achieved their objective, i.e. most of them. These clusters, the local
authorities and the State will sign new three-year performance contracts setting out
objectives and guaranteing a governance budget for the period. Clusters with
inadequate results will have one more year to catch up.
OSEO Agency
The government assists SMEs and very small enterprises primarily through the
OSEO group, which provides three types of services: support for innovation (OSEO
Innovation), funding of marketing investments and the commercialisation phase in
partnership with banks (OSEO Financement) and guarantees for bank loans and
equity (OSEO Garantie).
OSEO Innovation’s activity focuses on support for innovative projects carried by a
single business with a cost of less than about €3 million. In 2008, OSEO Innovation's
activity was enriched with an industrial strategic innovation programme, Innovation
Stratégique Industrielle (ISI), born from the merger with the former Agence de
l’Innovation Industrielle (AII, industrial innovation agency) at the beginning of 2008.
The 2008 appropriations for this programme should be around €300 million for
partnership-based projects with a large R&D component (between €3 and €10
million each). The purpose is mainly to boost the growth of medium-sized
companies.
The range of OSEO's financing guarantees for innovative projects will be extended.
In partnership with the European Investment Bank (EIB), OSEO will be
implementing the Risk Sharing Finance Facility (RSFF) as part of the 7th Research
and Development Framework Programme (RDFP).
The Carnot label
18
The Carnot label was awarded to 33 research entities in 2006 and 2007, selected by a
jury after a call for project tenders. The purpose of this label is to support the
development of partnership-based research. Modelled after the German Fraunhofer
institutes, this label, granted for 4 years, acknowledges their capacity to collaborate
effectively with businesses and gives them the right to an additional ANR
endowment based on the amount of revenue from research contracts in partnership
with businesses. The objective is two-fold: prompting public research entities to
develop partnership-based research and allowing them to launch projects with
the Carnot endowment awarded by ANR. In 2007, Carnot endowments totalled €62
million18.
See ANR’s 2007 Annual Report.
26
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Research tax credit
The research tax credit (CIR - Crédit d’Impôt Recherche) is a cross-functional R&D
support mechanism (without restriction on size or sector). In terms of economic
theory, it is the public compensation for the positive externalities generated by
private R&D spending. The Budget Act for 2008 radically simplified the mechanism
by abolishing the fraction calculated over the spending increase and significantly
raising the tax credit rate applied to the spending volume, raising it to 30% of R&D
expenditure up to €100 million (50% the first year and 40% the second). Above that
amount, businesses are eligible for a 5% tax credit without cap.
The 2008 reform is intended to stimulate R&D investment by companies established
in France and to make France more attractive for the research activities of French
and foreign companies. The State tax credit is estimated at €3.9 billion for 2008.
Developing the digital economy
The digital economy is at the core of ongoing technological changes. It has been
determined that Information and Communication Technologies (ICT) are a key
factor in productivity gains19.
The Council of the European Union has therefore asked all Member States to provide
broadband internet in all schools by 2010 and to make it available to the largest
possible number of households.
Against this background, the government will present in the autumn of 2008 a digital
economy development plan capable of making France once again a leading digital
nation by 2012. Its goal will be to ensure that all citizens have access to fixed and
mobile broadband networks between now and 2012 as well as to terrestrial digital
television. This plan will have four priorities: providing everyone with access to
digital networks and services, building up the production and supply of digital
contents, increasing and diversifying digital uses and services in businesses,
government administrations and private homes, and modernising governance of the
digital economy.
Fixed and mobile
broadband and highspeed broadband
In the first quarter of 2008, the number of broadband connections in France reached
16.2 million lines, up a significant 22% from the year before. 98.32% of the French
population has access to ADSL broadband, meaning that about 2% of the population
in 10% of French territory is not yet covered. Converging triple play offers are
extremely popular, not least because of their simplicity. The target is to ensure access
for the entire population (100%) to fixed and mobile broadband by 2012. Created on
3 June 2008 during the Digital Symposium, the Comité pour la Couverture
Numérique des Territoires (committee for digital coverage of the regions) will help
achieve this objective. As at end-September 2007, 10.4% of mobile telephone
subscriptions were for 3G or 3G+ services, while 3G+ is currently available for about
70% of the population.
To improve the geographical coverage of fixed and mobile broadband services, the
Economic Modernisation Act of 4 August 2008 extended the unbundling obligation
(which permits competition in the ADSL segment) to cross-connection points and
required the French telecommunications and postal sector regulator (Autorité de
Régulation des Communications Electroniques et des Postes - ARCEP) to study the
conditions under which 3G infrastructures could be shared among mobile telephony
19
See ICTs and Economic Growth,
it.asp?REF=9203031E.PDF&TYPE=browse
OECD,
2003,
http://www.oecdbookshop.org/oecd/get-
France National Reform Programme, 2008–2010
27
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
operators in order to cover the remaining 30% of the population as soon as possible.
In February 2008, France had 43,500 subscribers for fixed high-speed broadband
fibre optic services, 510,000 households were connected and 2 million households
could be connected.
With an objective of 4 million fixed high-speed broadband subscribers out to 2012
and developing high-speed mobile connections in the longer term, the government
has prepared a programme with 4 targets:
• Lowering civil engineering costs by making existing cable ducts available for
all network operators wishing to offer high-speed broadband fibre optic
services and by informing local authorities of the deployment of high-speed
lines in order to help them to take responsibility for their role as developers
and to cover blank zones effectively;
• Making it easier and less expensive to wire buildings: the Economic
Modernisation Act provides inter alia that co-owner meetings must look at
commercial offers from operators, that new buildings must be pre-wired for
fibre optics and that home access networks should be opened to competition;
• Giving everybody access to the speed needed for future services as part of the
changeover to a pure digital system; the frequencies released by the
discontinuance of analogue broadcasting will be reused for digital dividend
plan;
• Stepping up R&D and the development of applications: the deployment of
high-speed broadband needs to be accompanied by new services. It is
important to be able to test these services on the large-scale test platforms
offered by certain competitive clusters in the ICT sector.
Broadband coverage for junior and senior high schools, primary schools
and kindergartens
In the first quarter of 2008, about 95% of all secondary education institutions - junior and senior high
schools - and about 60% of all kindergartens and primary schools had access to the internet at a
connection speed of at least 512 kbit/s. 70% and 20%, respectively, had access to a speed of at least
1024 kbit/s. These figures are steadily improving. The target of 100% coverage is addressed in the
general plan to provide the French population with broadband.
To encourage the use of information technologies, service portals known as "Espaces Numériques de
Travail" (ENT - digital work areas), have been created. Their purpose is to provide each member of
the educational community with simple and secure access to a complete package of contents and
services geared to his or her needs, to digital resources (whether specifically acquired or not) and to
communication and collaboration services (collaboration within a class, between classes, etc.).
From 2010 onwards, the mainstreaming of ENTs will be accompanied by the obligation for secondary
schools to use electronic homework notebooks and to work towards a "zero paper" objective for intraschool exchanges. Moreover, many ongoing projects require broadband, such as the project to
introduce videoconferencing in order to use native speakers for language learning. This campaign is
known as "1,000 Videoconferences to Learn Languages in Primary School". It was launched in 2008
and will be evaluated in 2009. Its purpose is to identify factors making it easier to mainstream
language learning and to facilitate videoconferencing-based collaboration with public and private
institutions and other providers of resources.
28
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Other digital
economy projects
In view of the digital economy's importance for growth, many digital economy
projects are in the pipeline:
• Management of frequencies has been geared to state-of-the-art developments
in order to promote the most effective radioelectric spectrum technologies.
The Economic Modernisation Act of 4 August 2008 led to the adoption of a
charge-based payment system in October 2007 and provides for the possibility
of a pure auction system.
• To encourage the development of secure services (RFID technology: Radio
Frequency IDentification), the government will set up a national reference
centre which will be responsible for providing information and contribute to
the standardisation of this activity. A call for tenders was launched in
December 2007.
• A forum on contactless mobile services will be set up in order to develop such
services and to bring together the stakeholders.
• A video game development tax credit was introduced in May 2008 in order to
stimulate the gaming sector.
• The first multiplex was selected for the launch of personal mobile television at
the start of 2009. More generally, the changeover to a pure digital system
should make it possible to enrich the catalogue of broadcasting and electronic
communications services.
• The ICT&SME 2010 programme launched in 2005 promotes the development
of common sector standards to encourage the use of ICTs in the SME segment.
The first standards and tools developed for this programme were presented in
November 2007.
The future digital economy development plan will create an additional opportunity to
revive government policy in this area.
Ensuring excellence in higher education
Our universities need to contribute to the momentum required to achieve "French
excellence". Every year 90,000 students leave the higher education system without a
diploma. Moreover, one year after obtaining a diploma, 53% of all university
graduates with 4 years of university studies are still looking for a job. The bachelor's
degree is not attractive enough compared with other study options and the rate of
non-completion is too high (half of all first-year students studying for a bachelor's
degree do not make it to the second year).
Moreover, French universities have never had the autonomy required to work out a
coherent and attractive university project to achieve excellence in all areas of
research. Finally, the technical resources of French universities are not always up to
international standards.
In response to these challenges, several measures have been taken since the summer
of 2007 to make the French university system more effective and competitive,
including the law of 10 August 2007 on University Freedoms and Responsibilities,
the "A Successful Bachelor's Degree" plan and Operation Campus.
Implementation of
the law on university
freedoms and
responsibilities
The law of 11 August 2007 on University Freedoms and Responsibilities (LRU)
modernises university governance over a five-year period. It redefines the role of the
Board of Directors, the Study Board, the University Life Board and the Scientific
France National Reform Programme, 2008–2010
29
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Council and strengthens the powers of the university president, henceforth
responsible for carrying the university project forward. The purpose is to give
universities full control over their budget and human resources in order to deal with
international competition. In 2008, all universities amended their articles and elected
a new Board of Directors. The broader competences and responsibilities provided for
by the new law will be transferred to them by 2012. A first wave of twenty
universities will get broader powers on 1 January 200920.
A multi-year plan for
a successful
bachelor's degree
The purpose of the "A Successful Bachelor's Degree" plan is to restore the value of
this degree. It is part of the objective of making sure that 50% of each generation of
students has a higher education diploma by 2012.
Implemented in February 2008, this plan provides for the widespread introduction of
active orientation services, an enhanced pedagogical supervision to permit
personalised assistance to students (especially students in difficulty), the
implementation of bridges and reorientation mechanisms between study options,
professionalisation by providing courses in languages and information technology
and by unifying vocational courses (training periods, know-how), and initiatives to
stimulate professions taught at university technology institutes (IUT) and engineering
sections (STS - Section de Technicien Supérieur).
The "A Successful Bachelor's Degree" plan will be gradually implemented starting
2008, taking into account first-year, then second-year and finally third-year students.
The corresponding resources are the equivalent of 5 additional individual course or
assistance hours per week per student. The total budget for the 2008-2012 period is
€730 million, including €35 million in 2008, €103 million in 2009, €170 million in
2010, and €211 million in 2011 and in 2012.
Operation campus
The purpose of Operation campus is to renovate existing university campuses with a
budget of €5 billion in order to turn them into genuine living spaces, to federate the
great campuses of the future and to increase the international visibility of French
campuses. 10 major projects were approved in 2008 and will be implemented at the
start of 2009. Operation Campus is financed under public-private partnerships. These
partnerships are covered by general contracts which provide for long-term
investment in and maintenance of campus buildings.
Guaranteeing quality basic training for everyone
A country's innovation capacity is highly dependent upon the training of its workforce,
which must provide the skills required for every sector of the economy, including the
research sector.
Despite the stated aim to guide 50% of young people to a higher education diploma, 80%
to baccalauréat levels and 100% to a level V certificate, international surveys have
revealed certain shortcomings in the reading ability of French students as well as their
knowledge and understanding of mathematics, science, history and geography. Every
year, about 150,000 students leave the school system without a qualification.
A general reform at all training levels should make it possible to achieve the stated
objective and to train future generations properly. This would include a reform of the
primary education system, improved advice and guidance through the introduction of
20
Aix-Marseille-II, Cergy-Pontoise, Clermont-Ferrand-I, Corte, Limoges, Lyon-I, Marne-la-Vallée, MontpellierI, Mulhouse, Nancy-I, Paris-5, Paris-6, Paris-7, La Rochelle, Saint-Etienne, Strasbourg-I, Strasbourg-II,
Strasbourg-III, Toulouse-I, Université Technologique de Troyes, see below.
30
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
an orientation course focusing on the discovery of occupation opportunities,
educational support mechanisms and a reform of vocational training options.
Reform of primary
education
The reform of the primary education system, intended to divide the number of dropouts after primary school (currently 15%) by three in 5 years and to halve the class
repeat rate, aims to give each pupil the basic knowledge and skills needed to continue
studying. This reform introduces new programmes focusing on basic literacy and
numeracy skills and reorganises school hours, reduced from 26 to 24 hours per week,
together with 2 hours of personal help for pupils in serious difficulty.
The impact of this reform will be assessed by implementing a new evaluation system
designed to provide reliable data about the results of pupils in the second and highest
form of the primary school system. These data will be indicators of the performance
of the educational system. This reform was implemented for the 2008-2009 school
year. The programme to take living language courses to all primary schools will be
completed in 2010.
A system intended to
guarantee equal
opportunity and
successful schooling
To increase the chances of success of every student, the government proposes to
mainstream educational support (2 hours of home work assistance, spread over 4
days; sports, cultural and artistic activities) at all junior high schools and primary
schools covered by the priority education programme, and to implement an
experimental educational support system at 200 general and technological high
schools to assist students during the school year and to organise courses during the
holidays for students with particular study problems.
The occupation and
training guidance
programme
Intended for all students from the second year in junior high school to the final year
in senior high school, the "occupation and training discovery programme" will be
introduced throughout the school system at the start of the 2009 school year. This
programme will give every student an opportunity to discover the available
professions, businesses and training facilities. Senior teachers will conduct personal
guidance talks with the participation of the family in the final year in junior high
school and in the last two years of senior high school and on arrival at the vocational
high school.
Promotion
of
vocational training
The vocational training system is currently chosen by one-third of all students. Its
overhaul is intended to improve their chances of professional integration and further
study. The objective for 2010 is to absorb 45,000 students in the vocational training
system after the final year in junior high school. The following three targets are intended
to achieve this objective:
• Recasting existing diplomas and certificates by shortening study for the vocational
high-school diploma from 4 to 3 years starting 2009, introducing an intermediate
level-V certificate which can be obtained while studying for the vocational highschool diploma, and upgrading evaluation procedures by implementing
assessment during the training programme.
• Strengthening performance-driven management of the vocational training services
map in order to improve the multi-year planning between the State and the
regional authorities.
• Developing an occupations high school in partnership with local authorities and
employers and working on quality to ensure that 800 high schools are eligible for
this label by 2010.
France National Reform Programme, 2008–2010
31
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
The promotion of the vocational training path also calls for more democratic access
to European mobility. A sustained effort to pool requests for Leonardo scholarships
through the network of chambers of commerce will make the procedures more
effective and help stimulate training institutes, young people and businesses. The
government is preparing a standard agreement with the rights and obligations of all
those involved when mobility is exercised at businesses in other Member States.
Promoting sustainable development
Environmental issues may have adverse economic and social consequences but can also be a source of
growth. Their externalities can be significantly reduced if suitable upstream measures are taken. In
addition, the necessary technological innovations are considered important as potential sources of jobs
and economic development.
Bringing together the State, the social partners, the business community, associations and the local
authorities, the Grenelle de l’Environnement Round Table adopted at the end of 2007 an ambitious
programme of change, intended to reflect the largest possible support.
The government has adopted several legislative and regulatory measures to guide a number of action plans
to this effect. The reduction of greenhouse gas emissions, the intensification of sustainable development
research, the fight against loss of biodiversity and regional sustainable development are the main
objectives of this government commitment.
Lastly, the State has to set an example and ensure that its decisions factor in not just their economic and
social impact but also their environment consequences. The State will promote environmentally friendly
public procurement by making environment criteria an increasingly important aspect of calls for tenders.
The government will submit to Parliament an evaluation of the environmental impact of public aid financed
from the budget or taxes.
Reducing greenhouse gas emissions
In order to fight climate change, France has committed itself to reducing greenhouse
gas emissions by 20% between 1990 and 2020, to improving its energy efficiency
and to raising the share of renewable energy in energy consumption to 20%.
France has launched two major reforms. The first is to improve the energy efficiency
of buildings, the second to reduce fuel consumption in the transport sector. The
building sector is the foremost consumer of energy in France with 42.5% of final
energy consumption, an annual emission of 120 million tonnes of carbon dioxide and
one-quarter of national greenhouse gas emissions. The transport sector, largely
dominated by road haulage traffic, offers enormous energy savings possibilities by
diverting transport to railways and waterways, which will be encouraged.
Increase in the
energy efficiency of
buildings
32
For new buildings, the government has recently created labels ("high/very high
energy performance", "low-consumption building", etc.), awarded to buildings with
less consumption than the regulatory thresholds, and has imposed in-depth energy
studies for large new buildings. The Grenelle de l’Environnement Round Table plans
to improve verification of the application of heat regulations and to make the "low
consumption buildings" label a fixture by 2012 and the "positive energy buildings"
label by 2020. Under the Budget Bill for 2009, home ownership accession aid and
interest-free loans will offer bonus advantages provided the energy performance of
the buildings in question exceeds the thresholds laid down in the applicable
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
regulations.
France's objective is to reduce energy consumption of existing buildings by 38%
between now and 2020. All buildings owned by the State and its public
establishments will be required to reduce energy consumption by 40% and
greenhouse gas emissions by 50%. The entire subsidised housing inventory will be
renovated to reduce average consumption to less than 150 kWh of primary energy
p.a./sq.m.
The government is further planning a series of financial incentives to encourage
works in existing residential buildings. The Budget Bill for 2009 includes an interestfree eco-loan starting in 2009 to help finance major renovation works intended to
improve home energy performance.
Support for the
shift to rail and
waterways
Road haulage currently accounts for 86% of freight transport, compared with 12%
for rail and 2% for waterways. The target is to boost the non-road freight market
share to 25% by 2012 (see the paragraph on Improving the efficiency of rail freight
transport, p. 19). 21.
The market share of freight transported to and from ports will be doubled as part of
France's seaport policy. This will be achieved by developing maritime shipping
highways along the Atlantic and Mediterranean seaboards and by strengthening the
network of sovereign inland waterways (i.e. State-owned rivers and canals which
cannot be transferred to local authorities). The increase in road haulage capacity will
be limited to eliminating congestion points, solving safety problems and catering to
local needs. A truck mileage tax will be introduced to reduce the environmental
impact of freight traffic.
Passenger transport policy is to promote an integrated multimodal transport system
which focuses on rail transport. The authorities will continue to enrich the network of
high-speed railways between French regions. Connections with the major airport
hubs will be improved. The creation of new airports will be limited to displacement
of traffic for environmental reasons. The authorities will also implement measures to
optimise fuel consumption during the landing and takeoff phases. The target is to
lower fuel consumption per passenger/kilometre by 50% and to reduce nitrogen
oxide emissions by 80% between now and 2020. Urban measures include initiatives
to encourage the use of public transport, car pooling, walking and bicycling as well
as the introduction of technological innovations to reduce vehicle fuel consumption.
The State's objective is to reduce the average carbon gas emission of the stock of
passenger cars to 130 gCO²/km by 2020, particularly by means of the éco-pastilles
tax introduced in January 2008. Similar objectives will be set for vans and mopeds.
Lastly, the mileage tax for trucks, so far adopted in principle for the Alsace region
only, will be extended in 2011 to all main roads in France.
Stepping up sustainable development research
Research is a vital part of efforts to analyse environmental processes. It has led to
technological innovations which are key to preservation of the environment and
adaptation to global change. In unclear scientific areas, research is essential to
provide the authorities with the data required for informed decisions and to enrich the
public debate.
The authorities are planning to step up the national research effort in order to tackle
21
See the paragraph on Improving the efficiency of rail freight transport, p.19
France National Reform Programme, 2008–2010
33
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
the challenges ahead. They intend to do so by rallying the competitive clusters
behind such themes as climate change, energy, transport, living space, agriculture,
biodiversity and health in connection with the environment (particularly by finding
substitutes for chemicals, by developing ecotechnologies, etc.).
The State plans to pour an additional €1 billion in sustainable development research
through to 2012 to promote the themes and the issues identified and to help society
adapt to the climate change and its consequences.
Halting the loss of biodiversity
France has territories in four continents and three oceans. The four biogeographical
zones in France's mainland territory in Europe are home to a wide variety of
ecosystems. France's overseas territories in the sub-boreal, tropical and equatorial,
austral and Antarctic zones, are home to 3,450 plant species and 380 vertebrates
which are unique in the world.
The government's biodiversity objective is to put 2% of France's territory under high
protection within the next 10 years, to create 3 new national nature parks, to acquire
20,000 hectares in humid zones and to set up protected marine areas in 10% of
sovereign waters. The target is to do so by 2012 in mainland France and by 2020 in
the overseas départements. Special conservation and restoration plans will be
implemented in the 5 years ahead to protect endangered plant and animal species in
mainland France and overseas. An environmental protection framework will be
worked out before 2012 to restore ecological continuities and will be partly included
in town planning documents.
Particular attention will be paid to the available information. The organisation of a
network of botanic conservatories and a national biodiversity observatory are
expected to improve our knowledge of biodiversity, helped by initiatives to update
inventories of Zones Naturelles d’Intérêt. Ecologique, Floristique et Faunistique
(ZNIEF - natural zones which are of ecological, plant and animal interest) and lists of
endangered species (especially lists for overseas biodiversity).
Promoting sustainable development at local level
Competitiveness, innovation and sustainable development are the foundations of
action strategies in regional operational programmes.
Competitive clusters22 contribute to the development of industrial activities,
employment and the regional economies. To stimulate innovation, the French
national authorities have provided the regional authorities with an ad-hoc
methodology enabling them to diagnose their situation and to implement genuine
regional innovation strategies. Sustainable development constraints are key to this
methodology. For instance, transport objectives include the use of new fuels and the
development of multimodal mechanisms and public transport facilities. More
generally, the methodology is designed to optimise the use of energy. In this context,
regional authorities responsible for more than 50,000 inhabitants will be invited to
prepare regional energy and climate plans.
In line with Community objectives, regional strategies pay close attention to urban
22
See the paragraph on Competitive clusters, p. 26
34
France National Reform Programme, 2008–2010
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
areas, which are not only the backbone of economic growth but also the centre of
social integration issues (reflected in sustainable urban development, urban renewal,
the integration of poor people, economic and social inclusion, etc.). A policy to
anticipate and support economic changes has been implemented based on specific
actions for businesses, industries, regions and all working people, employees and job
seekers (on 10 June 2008, the government announced the creation of a Fonds
National de Revitalisation des Territoires - National Regional Revitalisation Fund).
European intervention: The European Regional Development Fund
The strategic aspect of the cohesion policy has been assigned more importance in order to optimise
integration of European Community priorities, as embodied in the Lisbon Strategy. The idea is to
focus funding on the Lisbon objectives (earmarking of appropriations), in which sustainable
development constraints are key. This approach makes it possible to target development priorities
according to relevant criteria. However, such regions as Brittany have had to adapt them to their
particular needs.
The National Strategic Reference Framework (NSRF) was developed with the generous help of the
local authorities and adopted by the government during the meeting of the Comité Interministériel à
l’Aménagement et à la Compétitivité des Territoires (Interministerial Committee for Regional
Planning and Competitiveness) in March 2006 and by the Commission in June 2007. It reflects the
will to implement broad EU strategic guidelines at regional level and to align these guidelines with
major national and regional priorities. In the second half of 2007, the Commission approved the
regional programmes contributing to ERDF's "regional competitiveness and employment" objective.
Their budget is €5.6 billion for the period from 2007 to 2013. For the outermost regions covered by
the "convergence" objective the programme budget is €1.8 billion. This includes a special allocation of
€482 million to offset the additional cost generated by the specific difficulties referred to in
Article 299, paragraph 2, of the Treaty.
The main challenge is to factor in the diversity of the regional situations in mainland France and
overseas French territories in our policies. Like other EU countries, France is faced with a series of
issues, such as globalisation, energy control, the consequences of the global warming process and
population ageing.
While the development of France's overseas regions is seriously limited by structural handicaps arising
from their ultraperipheral situation, the regions in mainland France face fierce international
competition which makes it difficult for certain industrial sectors and regions to adapt themselves to
demand, owing in particular to their insufficient innovation capacity.
Competitiveness, innovation and sustainable development are therefore the pillars of the intervention
strategies adopted for the operational programmes developed by the French regions. The competitive
clusters are a highly promising tool for industrial policy and spatial planning purposes. Other key
issues include energy efficiency, the protection of natural resources and global warming risks. The
goal is therefore to focus interventions on these environmental and energy issues, which can also be a
major source of new jobs. In line with European Community objectives, regional strategies pay special
attention to built-up areas, which are not only engines of economic growth but also key to social
integration (sustainable urban development, urban regeneration, integration of the poorest, economic
and social inclusion, etc.).
Concretely, appropriations tend to be earmarked primarily for research and technological development
(RTD), which accounts for almost half of the contemplated expenditure. The second priority is the
environment. Assignment of priorities avoids dispersal and promotes concentration of appropriations
on the growth and employment objectives which form the backbone of the Lisbon Strategy.
France National Reform Programme, 2008–2010
35
1. SUSTAINABLE GROWTH, INNOVATION AND BUSINESS DEVELOPMENT
Allocation of ERDF funds for regions coming under the "regional competitiveness and
employment" objective
5,3%
RTD (innovation, research, support
for businesses): €2,560m
2,5%
9,4%
Environment (risk prevention,
biodiversity): €777m
ICT (infrastructures, services,
users): €587m
10,1%
47,4%
Regional cohesion: €546m
Energy (energy efficiency,
renewable energies): €507m
10,9%
Transport (multi-modes, public):
€288m
14,4%
36
France National Reform Programme, 2008–2010
Human capital, social issues:
€136m
2. OPPORTUNITIES FOR EVERYONE
2
OPPORTUNITIES FOR EVERYONE
The reforms of the goods and services markets will only produce results when supported by
in-depth reforms of the labour market. All these reforms complement each other. The
structural changes stimulated by reforms in the goods market, such as the creation of new
businesses or the growth of existing businesses, can only take place in a labour market which
encourages mobility and secures career paths. Thus the labour market reforms will ensure that
everyone is given every possible opportunity during his or her life.
The reforms implemented so far have already significantly improved labour market
conditions. The unemployment rate, as defined by the ILO, has dropped sharply since the start
of 2006 to its lowest level since 25 years (i.e. 7.2 % in the second quarter of 2008). The drop
in structural unemployment shows that this is not merely a cyclical improvement. According
to a study conducted by the Ministry for the Economy, Industry and Employment23, the
structural unemployment rate has improved steadily since 1996.
Nevertheless, certain structural problems persist. Labour is an underused production factor
compared with other countries. This is due to higher unemployment, a lower employment rate
and shorter hours worked per person, a dual labour market and a skewed wage scale.
Despite improvement, the French unemployment rate remains 0.7 point above the EU
average. The employment rate in the age bracket from 15 to 64 years of age was 64.3% in
2007, 0.5 point below the EU average. This gap primarily reflects high unemployment among
older and young workers. The number of hours worked per employee is lower than in most
other EU Member States.
The labour market remains too segmented between a section of the active population with
very stable employment and a population segment suffering from long-term unemployment
(especially among older workers) or alternating periods of temporary employment and
unemployment (particularly among young workers and especially women). In France, 45% of
employment contracts last more than 10 years, among the highest rates in Europe. By
contrast, the average length of time that workers over 55 remain unemployed is one of the
longest in Europe (more than 25 months). The period of unemployment for young workers of
less than 25 years of age matches the European average (almost 8 months). However, their
unemployment rate is very high (17.6% in the second quarter of 2008, 3 points above the
European average). 5.5% of all wage earners are underemployed, i.e. 1.4 million workers, of
whom three-quarters are women.
For the last 20 years the fraction of wages in value added has on the whole remained stable at
about two-thirds, but the wage scale is skewed due to a sharp increase in employees with
minimum wages, reflecting lack of proactive wage negotiations at corporate level. Albeit
down since 2005, the proportion of employees with minimum wages remained high at 13% in
2007, owing to the sharp increase from 2000 to 2005.
The French President is committed to reducing the poverty rate by one-third by 2012. The
Grenelle de l’Insertion Round Table, attended by all stakeholders, culminated in May 2008 in
agreement on a road map designed to achieve this objective.
23
Distinguishing cyclical from structural components in French unemployment J.P.Renne, Trésor-éco No. 10
March 2007, http://www.dgtpe.minefi.gouv.fr/TRESOR_ECO/anglais/pdf/2007-004-10en.pdf
France National Reform Programme, 2008–2010
37
2. OPPORTUNITIES FOR EVERYONE
The government's strategy is to implement reforms in all the following areas: improving the
operation of the labour market, encouraging activity and guaranteeing distribution of the gains
of economic growth. The success and quality of these measures will depend upon the
involvement and commitment of all players in the reform process: consultation of the social
partners ensures laws and regulations that reflect the difficulties faced by businesses and
employees and also ensures that they contribute actively to the change. This is why
modernisation of the social dialogue and broad consultations were a prerequisite for the
ongoing reform policy.
Modernising the social dialogue
The success of any ambitious reform strategy depends upon dialogue with all stakeholders in the
contemplated change. A quality social dialogue between the State, the unions and employers' organisations
is therefore the foundation of the ongoing reform policy. The Social Dialogue Modernisation Act of
31 January 2007, adopted to provide a clear and organised framework for the social dialogue, introduces
new conference, consultation and information procedures in the Labour Code, partly inspired by those
applicable at European Union level:
Conferring: when the government considers a reform in the general rules of labour law - i.e. individual and
collective labour-management relations, employment and lifelong training -, it must first of all confer with
the representative national and intersectoral unions and trade organisations, on the basis of a policy
document. During this step, the unions and trade organisations must announce whether or not they intend
to negotiate an intersectoral agreement by a deadline agreed between them (Article L. 1 of the Labour
Code).
Consulting: the laws and regulations prepared by the government in the light of conference and negotiation
results must be submitted to the usual social dialogue entities i.e. the Commission Nationale de la
Négociation Collective (the National Collective Bargaining Commission), the Comité Supérieur de
l’Emploi (High Employment Committee) and the Conseil National de la Formation Professionnelle Tout au
Long de la Vie (National Lifelong Learning Council) (Article L. 2 of the Labour Code).
Informing: the law provides for an annual meeting between the government and the social partners. The
public authorities and the representative organisations announce their respective reform and bargaining
timetables during this meeting (Article L. 3 of the Labour Code), which is held within the framework of the
Commission Nationale de la Négociation Collective (the National Collective Bargaining Commission).
This is the framework of the most recent major intersectoral negotiations on the modernisation of the
labour market24 and on representativeness, the development of the social dialogue and union financing
(common position of 10 April 2008).
Strengthening unions representativeness, social dialogue and union financing
Based on intersectoral negotiations (common position of 10 April 2008), the Social
Democracy Renewal Act and the working hours reform of 20 August 2008 amend
the collective bargaining rules. They strengthen the legitimacy of the social partners,
confirm the legitimacy and extend the scope of collective bargaining agreements.
The rules and criteria determining a union's representativeness have changed. From
now on, the key criterion will be the results of trade union elections.
24
See the paragraph on Promoting worker mobility, strengthening career security, p. 44
38
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
The validity of agreements is also governed by new rules. In the future, agreements
will have to be signed by unions representing at least 30% of the votes and will apply
only if not opposed by representative union organisations with at least 50% of the
votes.
Achieving the social partners' negotiation programme for 2008
The social partners already appear to have a busy bargaining programme for 2008.
Certain intersectoral agreements (on gender proportions and gender equality at work,
employment of older workers and diversity in the workplace) provide for end-2008
reviews to take stock of initial application results. The social partners have further
decided to launch negotiations on supplemental health insurance.
In recent months, the social partners have moreover received several policy
documents on the reform of lifelong training, improvement of labour conditions and
the ongoing occupational medicine reform
Improving the operation of the labour market
The unemployment rate has dropped sharply since the start of 2006 to its lowest level since 25 years,
demonstrating the ongoing improvement of the French labour market. Nevertheless, to achieve the French
President's objective of 5% unemployment in 2012 the French economy must be kept competitive and the
continuous adjustment of the labour market to technological change and global demand change must be
encouraged. This is why new reforms are being implemented.
In line with the integrated flexicurity strategy and corresponding recommendation of the Council of the
European Union, these reforms are designed to reconcile flexibility of the economy with secure career
paths for employees. To achieve this aim, the Public Employment Service efficiency needs to be enhanced,
employee mobility needs to be encouraged and lifelong training needs to be made more effective.
Reforming the Public Employment Service
The Public Employment Service (PES) needs to facilitate labour mobility in order to
make sure the French economy keeps up with technological change and global
demand change. To do so, the PES must effectively identify and match labour market
demand to supply as well as offer appropriate incentives to labour market
participants while encouraging the prevention of discrimination, which hampers
optimum allocation of resources to needs.
The objective of the PES' reorganisation and the redefinition of job seekers' rights
and obligations is to make the PES more effective for both businesses and job
seekers. These two projects help close the gap between French practices and those
adopted in recent years by many European partners.
France National Reform Programme, 2008–2010
39
2. OPPORTUNITIES FOR EVERYONE
Merger of the
ANPE and the
unemployment
insurance network
The government instigated the Public Employment Service Organisation Reform Act
voted on 13 February 2008 to merge Agence Nationale Pour l’Emploi (ANPE National Employment Agency) with the unemployment insurance network in order
to provide job seekers with a single correspondent for registration, placement,
benefits and support services. This reform caters to two objectives:
• facilitating procedures for users - businesses and job seekers - who now have
access to a national multi-purpose network providing a complete array of
recruitment and placement services;
• broadening the range of services provided to all users of the Public
Employment Service and improving the operation of the labour market.
Achieving this two-fold objective will be facilitated by pooling the resources of both
networks - which will allow the new operator to strengthen local teams - and by
developing a service catalogue drawing on the expertise and skills of both networks
(contact with businesses, analysis of labour market demand, diagnosis of what a job
seeker requires to become employable).
The social partners will remain in charge of unemployment insurance and continue to
set its rules. The unemployment insurance regime will remain under UNEDIC
supervision. The new institution born from the merger of ANPE and the
unemployment insurance network will manage daily unemployment insurance
operations on behalf of UNEDIC.
The reasonable
employment offer
A successful job search calls for a shared commitment on the part of both the job
seeker and the Public Employment Service and is dependent on several conditions:
• matching the target to the job seeker's career and personal and family situation;
• making sure the Public Employment Service provides effective support during
the search, geared to the predetermined target;
• committing oneself fully to the search until actual employment.
The Job Seekers' Rights and Obligations Act of 1 August 2008 provides a legal
framework for the precise definition of a reasonable employment offer. This offer
reflects a job seeker's personal project and is referred to as the projet personnalisé
d'accès à l'emploi (PPAE). The project, prepared jointly by the job seeker and the
new operator, sets out the scope of a job seeker's search, based on his or her
qualifications and personal and family situation, particularly the characteristics of the
target job, the expected wages and the preferred geographical area. This mechanism
should be implemented immediately after publication of the implementation decree
taken in the Conseil d’État, scheduled for the autumn of 2008.
The PPAE project and the accompanying reasonable employment offer will change
over time. The law of 1 August 2008 obliges job seekers to broaden the geographical
area of their job search and to limit wage demands in order to raise the chances of
finding a job quickly.
This law is underpinned by a series of reciprocal commitments: the Public
Employment Service agrees to take all measures needed to help a job seeker find a
job and presents the job seeker with job offers considered reasonable. In return, the
job seeker agrees to accept such offers and may be penalised in the case of repeated
refusals.
The new law is more flexible and imposes stiffer penalties. Its flexibility improves
the existing situation, in which a job seeker may be excluded and sanctioned after
refusing a single employment offer. Under the new system, job seekers may refuse
40
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
two reasonable employment offers before being struck for two months from the list
of job seekers.
More support for
the persons furthest
from employment
The Grenelle de l’Insertion agreement includes a priority objective entitled
"overhauling the way the Public Employment Service supports people who are
furthest from employment". One of the recommended strategies is to "make support
for people in the integration phase one of the priorities of the new operator (born
from the merger between ANPE and the unemployment insurance network)". The
new operator's service catalogue will no longer distinguish between job seekers
entitled to unemployment insurance and recipients of minimum social benefits. The
new operator will also provide continued support for employees under subsidised
contracts, employees in integration organisations and trainees.
Promoting worker mobility, strengthening career security
The mobility of workers and a more flexible labour market in general contribute to
the competitiveness of an advanced economy since they permit rapid integration of
new technologies and a flexible response to customer demand. Increased flexibility
needs to be balanced by guaranteeing employee protection. This is achieved by
improving the security of career paths. This integrated flexicurity approach combines
flexibility and security for both businesses and employees.
Flexicurity implies a balance between (i) more flexible working conditions under
adapted employment contract rules, (ii) modern social protection, (iii) access to
lifelong learning programmes and (iv) effective support by human resource managers
of the Public Employment Service during career transition phases. The French
approach to flexicurity is based on the concept of career paths and on measures
designed to secure such career paths.
Many recent and ongoing reforms strengthen the "French flexicurity approach",
particularly reforms in lifelong training, in the Public Employment Service
(reasonable offer and personal project) and in professional integration of young
people25. Based on the roadmap laid down by the French President, a general
national intersectoral flexicurity agreement was signed on 11 January 2008 and
transposed in the Labour Market Modernisation Act.
A first intersectoral
flexicurity
agreement
The national intersectoral agreement of 11 January 2008, transposed in the Labour
Market Modernisation Act of 12 July 2008, contains provisions designed to increase
the flexibility of employment contracts and their termination. However, increased
flexibility is offset for employees by provisions to secure career paths.
To make it easier for businesses and employees to terminate employment contracts,
the national intersectoral agreement enshrined in the Labour Market Modernisation
Act of 25 June 2008 allows them to negotiate agreements on the termination of
employment contracts. This new arrangement allows employers and employees to
terminate their contract by agreement, known as contractual termination. This
requires the two parties to sign an agreement after one or more talk sessions. The
agreement inter alia sets the contemplated termination date and stipulates the specific
contractual termination compensation, which may not be less than the legal layoff
allowance. The parties have a retraction period of 15 calendar days. To be valid, such
an agreement needs to be approved by the département [administrative district]
25
See the paragraph on Reforming the Public Employment Service, p. 39 and Promoting full integration of young
peoplein the labour market, p. 47.
France National Reform Programme, 2008–2010
41
2. OPPORTUNITIES FOR EVERYONE
Labour, Employment and Lifelong Training Director, who has 15 business days to
review the agreement. This type of termination follows a precise procedure and
entitles to unemployment benefits.
Lastly, the intersectoral agreement enshrined in this same law introduces for a period
of 5 years (after which the results will be evaluated) a special-purpose contract to
allow engineers and executives to complete certain projects with an unspecified
termination date. This is a non-renewable fixed-term employment contract for 18 to
36 months, which ends when the purpose for which it was signed is achieved. Its use
is subject to the existence of a bargaining agreement at sector or company level. Such
employees are entitled to the usual guarantees to provide assistance with professional
reintegration, to validate knowledge acquired through experience (referred to as
Validation des Acquis de l’Expérience (VAE)) and to priority in recruitment and in
access to lifelong training. When contractual relations are severed after termination
of this contract, the employee is entitled to a compensation corresponding to 10% of
his or her remuneration.
The January 2008 agreement confirms the importance of "forward-looking labour
force and skills management", referred to as gestion prévisionnelle des emplois et des
compétences (GPEC) in the government's career path security strategy. The
agreement stipulates that an intersectoral GPEC deal on application of these
principles must be negotiated within six months.
As part of the drive to enhance career security, the agreement announces negotiations
on unemployment insurance and forward-looking labour force and skills
management, and affirms the critical importance of worker support and mechanisms
to enhance skills (personal assessment after a first job, creation of regular
professional skills reviews (bilan d’étape professionnel), access to lifelong training
and the VAE mechanism). However, it also provides for the possibility to transfer
certain entitlements in the case of contract termination:
• laid-off employees may use the remaining hours earned as part of their
individual right to training, referred to as droit individuel à la formation (DIF)
to pay for training actions, skills assessments, validation of knowledge
acquired through experience or support measures;
• they will be allowed to keep their supplementary health and welfare insurance
for at least three months on the same terms as company employees.
The agreement calls for sector negotiations to agree portability and transferability
mechanisms for other rights, such as pension savings accounts.
Stepping up lifelong learning
Lifelong learning should parallel occupational developments in order to promote
employability. This approach is a response to the difficulties of employment areas
threatened by relocation. In 2005, €26 billion were earmarked for lifelong training.
The results have been mixed and the institutional organisation is complex. Lifelong
training should benefit those who need it most: job seekers, low-skilled workers and
regions undergoing industrial transformation.
Lifelong training
reform process
42
The lifelong training reform is one of the priorities set by the French President for
2008. It will be based on the report of the joint group made up of the State, the regions
and the social partners, presented to the government on 10 July 2008, which
recommends eight main reform paths to simplify the system, to improve its
effectiveness and to make it fairer: (i) clarifying the powers of each player, especially
at the regional level, (ii) determining the prerequisites for "deferred training rights",
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
(iii) securing career paths, (iv) adjusting individual training leave (or Congé Individuel
de Formation (CIF)) and the individual right to training (Droit Individuel à la
Formation (DIF)) in order to enhance professional mobility and advancement
perspectives, (v) improving lifelong training financing conditions by implementing
more flexible procedures, (vi) modernising OPCAs (Organismes Paritaires
Collecteurs Agréés, Authorised Joint Collection Bodies) and their governance by
making services to businesses and individuals the backbone of their operations, (vii)
strengthening the system's anticipation and evaluation capacity and transparency,
(viii) improving the quality of the training catalogue, which needs to be geared more
closely to demand from decision-makers and users. Equal access to training for
everyone must also be guaranteed.
The government has sent a guideline document to the social partners outlining the
negotiations to be conducted in the second half of 2008. Moreover, the government
and the Association des Régions de France (Association of French Regions) should be
holding talks on the respective powers of the players. On completion of this
negotiation and dialogue phase, the government will prepare a law bill. This should
take place before the end of the year.
Enrichment of the
catalogue of lifelong
training services and
university
certificates
Selection in the French labour market tends to favour training programmes
culminating in a diploma. Thus, owing to their training expertise and their capacity to
deliver recognised diplomas, the universities should play an important role in the
lifelong training process.
Several mechanisms have been developed to promote integration of employees in
lifelong training, such as adjustment of course programmes, the development of
remote education, the ongoing professionalisation drive at universities (primarily
based on framework contracts and agreements with businesses) with the development
of professionalisation contracts, the implementation of qualifying training, whether or
not culminating in a diploma, in line with business and employee needs, and the
development of training packages of 20 hours and multiples of 20 hours in order to
make training more accessible within the framework of the DIF mechanism.
Continuing training is an integral part of the recently implemented "licence, master,
doctorate" (LMD) system and the development of validation of knowledge acquired
through experience reflect the policy that continuing training needs to be an integral
part of the career system in order to turn universities in the longer term into genuine
"lifelong learning universities".
For the French universities, this is reflected in the following targets for 2010:
• increasing the number of students registered for lifelong training courses from
333,000 trainees in 200526 to 400,000 in 2010;
• raising the proportion of job seekers among vocational trainees from 10% in
2005 to 12% in 2010, primarily by facilitating access for older workers and
young unemployed.
Moreover, two new diplomas were piloted during the 2007/2008 study year and will
be launched officially in 2009. The first is a digital economy and foreign languages
diploma (Brevet Informatique et Internet (BII or B2i) for adults), the second a
language diploma (Diplôme de Compétences en Langues - DCL).
26
Source: Evaluation, Forward Management and Performance Directorate, French Ministry for Education.
France National Reform Programme, 2008–2010
43
2. OPPORTUNITIES FOR EVERYONE
Promoting activity
The competitiveness of the French economy depends primarily on initiatives to raise the attractiveness of
work, which is after all an instrument to improve purchasing power. This objective is reflected in the
launch of measures to promote activity, to enable citizens to benefit more fully from the results of their
labour and to help the unemployed find work.
French productivity is at the level of its best peers. The gap between the standard of living in France and
the most advanced countries is therefore due mainly to shorter total working hours, itself the result of a
lower employment rate and fewer hours worked per person. The gap in the employment rate is primarily
due to the situation in two categories: older workers and young workers.
The reforms intended to promote activity affect all aspects of this gap including general actions to make
work more attractive and actions targeted at older workers, young workers and foreign workers. Lastly,
activity is supported by actions to provide an attractive workplace environment and to stimulate wage
equality between men and women.
Making work and activity more attractive
The French President has clearly stated that the revaluation of work is one of his
priorities. Close attention is paid to this objective, whose purpose is to help
individuals become more active and to harvest the benefits of their work. Many
legislative initiatives have contributed to this since May 2007, i.e. the Work,
Employment and Purchasing Power Act (“loi TEPA”)27, the Purchasing Power Act
(“loi PA”) and the planned working solidarity benefit 28
More attractive
overtime rules
The loi TEPA exempts overtime work from social security contributions and income
tax, simplifies its legal rules and standardises the overtime wage increase at 25%
(and raises the wage increase to this percentage for businesses with fewer than 20
employees). The volume of tax-exempt overtime work has steadily increased since.
New rules to ease
the law on overtime
work
In addition, the Purchasing Power Act extends the right to work longer hours and to
convert paid-holiday rights into money (by buying days of overtime leave and rest
and converting the time savings account into cash). It further allows employees with
fixed daily wages to benefit from the loi TEPA. Until the end of 2009, the
exemptions provided for by the loi TEPA will be complemented by new social
security and tax exemptions for income from the conversion of paid holidays.
Making working hours more flexible
In addition to the simplification of the legislation which had become too complex, it
appeared necessary to give employees and businesses the right, through collective
bargaining, to determine the work organisation best suited to business growth and to
employee expectations in terms of purchasing power and time management.
The Social Democracy Renewal Act and the working hours reform grant businesses
and sectors more leeway to schedule working hours flexibly over several weeks or
even over the entire year, to factor in actual production constraints and employee
needs at company level.
27
28
http://tepa.minefe.gouv.fr/
cf. section The “revenu de solidarité active”, p. 52.
44
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
Each business will be free to negotiate its own flexible working schedule while
remaining within working hours limitations and law constraints for employee health
(time reserved for breaks, rest, etc.).
Improving the employment rate of older workers
Improving the employment rate of older workers is essential for growth, social
cohesion and the sustainability of the social protection system. The number of jobs to
be filled on the labour market can be expected to soar when the generations born
after 1945 reach the end of their career. On average, it is expected that 750,000 jobs29
p.a. will have to be filled between 2005 and 2015.
The target imposed by the Lisbon Strategy is to reach by 2010 an employment rate of
50% for workers aged between 55 and 64. The employment rate of older workers in
France (38.3% in 2007) remains below the European average (44.7% for the EU–27)
and the Lisbon objective. As in all other European countries, the employment rate of
older workers has significantly increased in the last ten years. The apparent
stagnation of the employment rate since 2003 is mainly due to the fact that the first
generations of baby boomers have turned 58, the age from which the employment
rate begins to decrease.
The State and the social partners have launched the Plan National d’Action Concerté
pour l’Emploi des Seniors 2006-2010 (Concerted National Action Plan for
Employment of Older Workers 2006-2010) as part of their commitment to pursue a
general policy to maintain older workers in employment or help them back into the
labour market30. In the second half of 2007, this plan was enriched with a series of
measures. After its initial negotiations with the social partners during their 2008
meeting, the government presented them on 28 April and 26 June 2008 with two
policy orientation documents31 contemplating a series of new measures to raise the
employment rate among older workers.
After consulting the social partners, the government announced a Plan d’Action en
Faveur de l’Emploi des Seniors (Action Plan to Promote Employment of Older
Workers) on 26 June 2008. This plan has three objectives: providing businesses with
incentives to keep older workers employed, encouraging combined employment
benefits and pension and attracting older workers back to the labour market. Its
measures are designed to give businesses and sectors the incentives to pursue an
active management strategy for older workers, to liberalise combined employment
and retirement and to provide better support for job seekers of over 50 with the help
of specific actions on the part of the Public Employment Service.
Intensification of
the plan for older
workers
The initial objectives of the plan for older workers were strengthened in the second
half of 2007 with the following three important initiatives:
• the plan to rally the ANPE's resources strengthens the catalogue of services for
29
Result of a forward study on jobs by profession out to 2015: Les métiers en 2015 by CAS and DARES, 2007.
In this study, the number of jobs to be filled reflects net jobs created and retirements in a scenario of modest
GDP growth (2% average p.a.) and an unemployment rate of 7.5% at the end of the term under review.
30
Plan adopted under the national intersectoral agreement on the employment of older workers, agreed on
13 October 2005 and signed on 9 March 2006.
31
"Rendez-vous 2008 sur les Retraites" (2008 Retirement Meeting), http://www.travailsolidarite.gouv.fr/IMG/pdf/Propositions-2.pdf
and. "Mobilisation en Faveur de l’Emploi des Seniors"
(Encouraging
Employment
of
Older
Workers
Meeting),
http://www.travailsolidarite.gouv.fr/IMG/pdf/DP_mobilisation_emploi_des_seniors_26JUIN08.pdf
France National Reform Programme, 2008–2010
45
2. OPPORTUNITIES FOR EVERYONE
job seekers of over 50. 425,000 job seekers are concerned. They will benefit
from personal monthly follow-up from the first month of registration, a
systematic in-depth interview for job seekers who may be dispensed from a
job search, job search clubs, promotion of validation of knowledge acquired
through experience, etc.
• tighter early retirement and forced retirement restrictions (the contribution
levied on early retirements in the private sector is raised from 24.15% to 50%
and a contribution is introduced on forced retirement allowances),
• the Delalande contribution, which raised the cost of laying off workers of over
50 and consequently held back their recruitment, was abolished on 1 January
2008.
Company and
sector agreements
The social partners at company, group and sector level are invited to develop and
implement rapidly actions designed to keep older workers in employment, by
signing, by 2010, an agreement which meets minimum conditions. If no agreement is
reached, companies may work out an action plan reflecting the same conditions.
Effective from 2010, companies which have failed to sign an agreement or action
plan will pay a fine corresponding to 1% of the wage bill. No penalties will be
imposed on companies with fewer than 50 employees or, if covered by a sector
agreement, companies with fewer than 300 employees.
Abolishment of
forced retirement
Forced retirement will be definitively abolished. The exceptions agreed since the
retirement reform of 2003 will cease to be effective on 31 December 2009. In the
future, the decision to retire will be at the employee's sole discretion regardless of his
or her age. Agreements signed prior to 22 December 2006 will cease to be effective
on 31 December 2009.
Incentives to
continue working
Strong incentives to continue working have been proposed, particularly the removal
of obstacles to combined employment and retirement. The plan is to grant total
freedom to pensioners of 60 and over who worked a full career and to all pensioners
of 65 and over. Moreover, to stimulate people to extend their career, the premium
rate will be raised to 1.25% per quarter, or 5% p.a., in order to make this option more
attractive. Someone who works for 5 years after the age of 60 and after the period
required to benefit from a full pension would therefore enjoy a 25% pension
increase.
In overhauling the rules governing unemployment insurance benefits, the social
partners will have to take into consideration the need to provide every possible
incentive to keep older workers in employment.
The phasing out of
the dispensation
from the obligation
to look for a job
46
The Act on the Rights and Duties of Job Seekers of 1 August 2008 provides for the
gradual phasing out of dispensation from the obligation to look for a job, referred to
as dispense de recherche d’emploi (DRE), from 2009 onward. The DRE will be
maintained for all job seekers eligible for this system on 31 December 2008, while
the age at which job seekers become entitled to this mechanism will gradually be
raised. No further beneficiaries would be accepted from 2012 onward, based upon
the conclusions of a report evaluating the impact of raising the age barrier in 2009
and 2010.
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
Promoting full integration of young people into the labour market
Young people occupy a special position in the labour market compared with other
workers: a high unemployment rate, a very high proportion of fixed-term jobs and
crowding out of those with the least diplomas.
France distinguishes itself from many other European countries by the low
employment rate of people aged between 15 and 24 (in 2007, 31.5% versus 37.2%
for the EU-27 average). Young people study longer than elsewhere and few take a
job while studying. It is also distinguished by a high unemployment rate in the age
bracket from 15 to 24 (about 23%, higher than the European average of around
17%). Lastly, short-term jobs are overrepresented among young people since 35% of
young people have fixed-term contracts, temporary jobs or subsidised jobs, against
less than 15% for the aggregate workforce.
A genuine
employment
integration project
Employment policies for young people focus primarily on support measures to help
them develop employment integration projects. The objective is to speed up the
transition to stable employment or professional qualifications for those without these.
Local integration offices (485 all over France) received more than one million young
people for an interview during 2006, of whom almost half got at least a job or
training during the year.
A special contract has been developed, CIVIS (Contrat d’Insertion dans la Vie
Sociale, social integration contract) to help 800,000 young people from 16 to 25 to
find stable employment during the 5-year term of the plan (160,000 young people
p.a. until 2010) and to close the labour market access gaps. As at end-December
2007, i.e. after two-and-a-half years, this contract programme had attracted 484,000
young people, of whom 235,000 have since left it, including 41% with a stable job
(fixed-term contract of more than 6 months or open-ended contract).
The Espoir
Banlieues plan
150,000 to 200,000 young people of under 26 are without a job and living in
sensitive urban areas. The Espoir Banlieues (Hope for the Suburbs) plan announced
by the French President on 8 February 2008 includes three employment measures:
•
The Contrat d’Autonomie (autonomy contract) reflects a reciprocal
commitment between the State and young job seekers as part of a new
approach to make public action more effective: operators assigned to
neighbourhoods for 3 years, priority for young people not yet monitored by
the Public Employment Service and intensive, comprehensive services over
a period of 12 months. The first autonomy contract was signed on
10 July 2008 in the town of Mantes-la-Jolie. The objective is to sign 7,000
contracts by the end of 2008, 15,000 in 2009, 15,000 in 2010 and the
remainder in 2011.
•
Assistance with business creation is reflected in reforms to support or
provide funding (in the form of interest-free loans) to 20,000 business
creators a year once the system has come onstream (2010). The purpose of
this mechanism is to improve business plan quality in order to make it easier
to obtain banking facilities. The target is 5,000 projects a year during a
4-year period.
•
Large corporations have signed an engagement national pour l’emploi des
jeunes des quartiers (national commitment to employ suburban young
France National Reform Programme, 2008–2010
47
2. OPPORTUNITIES FOR EVERYONE
people) under which they agree to offer jobs, apprenticeships or workedbased training. Since 15 February 2008, almost 50 companies have agreed to
provide 40,000 jobs, 7,000 worked-based training employment contracts and
35,000 apprenticeships out to 2010.
Guaranteeing gender equality at work
Wage inequality between men and women is high. In 2006, the gap was 18.9% for the
average monthly net wage of full-time employees in the private and semi-public
sectors. The difference is even larger at executive level (23.1%).
Without waiting for the mid-term review provided for in the Act of 23 March 2006,
the government has decided to implement, in cooperation with the social partners, a
proactive policy to reduce wage gaps in three steps:
• Step one: assisting negotiators in companies and industrial sectors to launch
negotiations and prepare a wage gap reduction plan before 31 December 2009.
Tools to help companies to prepare their wage gap reduction plans have been
put online32. The Prefects are organising meetings to rally the regional business
community and the social partners and training for negotiators is encouraged.
The Comité de Suivi de la Négociation Salariale de Branche (Sector Wage
Negotiations Monitoring Committee), made up of all social partners and the
government, is also reviewing the progress of negotiations on gender wage
gaps.
• Step two: intensifying negotiations for bargaining agreements. At sector level,
the idea is to rally sector observatories and to activate existing regulatory
mechanisms. At company level, the Labour Inspection departments will start
checking compliance with gender equality at work obligations in the second
half of 2008. This verification campaign will be stepped up in 2009.
• Step three: examining the possibility of implementing a fine from 1 January
2010 against businesses which have failed to submit a gender wage gap
reduction plan before 31 December 2009. The proceeds from this fine will be
allocated to businesses wishing to launch a programme to promote equality and
gender diversity at work. The Prefects and the département services have
already conducted information and awareness campaigns for employers and in
2009 the Labour Inspection departments will carry out verifications and remind
the relevant entities of the applicable regulations.
Improving conditions in the workplace
Statistics show that the combined efforts of the French authorities, social partners and
businesses have improved the health, safety and working conditions of employees and
reduced the number of occupational injuries during the last three decades. Although
encouraging, these results remain insufficient. Every year, 700,000 occupational
injuries are recorded and 47,000 occupational diseases were officially recognised in
2006.
The reforms cater to three objectives:
• extending the sphere of employee health and security concerns to new risks; .
• improving conditions in the workplace to support the increase in career length,
to assist sectors considered "taxing" and to help sectors suffering from a labour
shortage;
32
Tools available at the web
solidarite.gouv.fr/espaces/femmes-egalite/
48
site
of
the
France National Reform Programme, 2008–2010
Ministry
for
Labour:
http://www.travail-
2. OPPORTUNITIES FOR EVERYONE
• making prevention players more effective by identifying prevention players
inside and outside businesses.
The « Santé au
Travail » plan
The Plan Santé au Travail 2005-2009 (Health at Work Plan 2005-2009), whose midterm review is currently underway, is designed to bring about a lasting improvement
in working conditions and risk prevention. This plan provides the framework for 23
actions organised around four objectives (i) improving knowledge of dangers, risks
and exposure in professional surroundings, (ii) making inspection mechanisms more
effective, (iii) reorganising occupational health supervision coordination bodies, (iv)
encouraging businesses to take a proactive approach to health at work.
The Conférence sur l’Amélioration des Conditions de Travail (Conference on
Improvement of Working Conditions) of 4 October 2007 continued the initiatives of
this plan. The Conference adopted three key measures: modernisation of the social
dialogue, reinforcement of intervention resources and tools for very small businesses
and SMEs (including the launch of a web portal dedicated to occupational risks, the
allocation of a budget of €4 million to a Fonds d’Aide pour les Entreprises (Business
Assistance Fund), improvement of training for members of the Comité d’Hygiène, de
Sécurité et des Conditions de Travail (CHSCT) and for employees, and initiatives to
combat the major risks (musculoskeletal disorders, carcinogenic, mutagenous and
toxic risks for reproduction, psychosocial risks).
The government has invited the social partners to start negotiations in order to
continue the reform of occupational medicine and to examine ways to strengthen the
position and resources of CHSCT committees.
The purpose of the occupational medicine reform is to review the functions and
organisation of the occupational health departments.
The need to improve the expert evaluation capacity of CHSCT committees calls for a
review of the conditions under which employees could be represented in businesses
with fewer than fifty employees and for improvement of the operation and expert
evaluation capacity of CHSCT committees by extending their term of office, the hours
credited for this function, training programmes for members and recourse to expert
evaluations.
Attracting foreign workers
From the viewpoint of the labour market, the development of a "selective"
professional immigration and the integration of immigration workers in the labour
market are migration policy objectives for the years ahead. Several tools have been
combined to achieve an objective of 50% professional immigration:
• for EU residents, the labour market was entirely opened up to the 10 new
Member States on 1 July 2008 and partly to Bulgaria and Romania, whose
residents are entitled to hold jobs in 150 professions accounting for 40% of all
job offers listed by the ANPE.
• For non-EU residents, an employee residence permit can be granted when a
particular sector or profession experiences recruitment difficulties. Three
mechanisms have been implemented to attract qualified workers:
The "Skills and Talents" permit is granted to highly qualified workers. The
authorities plan to issue 2,000 permits per year, of which the first were
granted at the end of 2007.
Since 2006, foreign students holding a diploma which is at least equivalent
to a master's degree obtained in France are entitled to a 6-month residence
permit after completing their studies in order to find a job related to their
training. They may not be refused a permit if they find a job whose wages
France National Reform Programme, 2008–2010
49
2. OPPORTUNITIES FOR EVERYONE
are at least 1.5 times the national minimum wage (SMIC).
Since 2007, a special residence permit has been granted to employees on
assignment in order to promote executive mobility at international groups.
Better distribution of the gains of economic growth
Fair distribution of the gains of economic growth gives citizens the benefits of their work, which in turn
encourages activity. The development of employee ownership schemes, incentive bonuses and profit
sharing contributes directly to this by offering employees a stake in the results of their company. Renovated
wage negotiations based on strong incentives also lead to better distribution of the gains of economic
growth.
The distribution of the gains of economic growth needs to be accompanied by a policy designed to fight
poverty and exclusion and to promote integration in the labour market. Lastly, discrimination must be
fought to ensure fair distribution.
Developing employee ownership, incentive bonuses and profit sharing
Financial participation in results and performance ensures employee commitment to
business plans. However, this mechanism is not only a personnel motivation tool; it
also allows employees to build savings or to increase their purchasing power.
France has three financial participation mechanisms: first, optional incentive bonuses
whose payment depends upon predetermined results or performance criteria; second,
profit sharing, whereby employees receive part of the profits of their company; and
third, wage-based savings, built by investment of the employee's profit share in, or
voluntary subscription of, the company's own securities. Employees may further be
entitled to stock options and bonus shares or take part in capital increases reserved
for employees.
Incentive bonuses are little used in businesses with fewer than 50 employees (whose
employees, moreover, are not entitled to the mandatory profit sharing mechanism):
only 10% of all employees in businesses with 10 to 49 employees and 3% of all
businesses with fewer than 10 employees had an incentive bonus system in 2006.
Financial participation is more common in large companies than in SMEs. The
French government therefore wants to encourage such businesses to negotiate an
incentive bonus agreement, but also to encourage businesses which do have this
system to raise the amounts distributed to employees.
Promotion of
incentive bonuses,
profit sharing and
employee ownership
As part of the drive to provide a better framework for stimulating earned income, the
government proposed a bill on earned income to the social partners at the meeting of
the Commission Nationale de la Négociation Collective on 1 July 2008. The purpose
of this bill is inter alia to promote the use of incentive bonuses and to grant
employees the freedom to use their profit share at their discretion.
The aim of this bill is to encourage businesses without an incentive bonus system to
deploy such a system in order to double the amounts paid out between 2008 and
2012. The text introduces a tax credit for businesses which, after publication of the
law, sign an incentive bonus agreement or increase the amount available for bonuses.
Moreover, a business which rapidly signs a more attractive agreement or rider may
pay its entire workforce a one-off bonus before 30 September 2009.
50
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
The bill further establishes the freedom to choose between immediate and deferred
availability of profit shares so employees can either enjoy immediate purchasing
power or build future purchasing power. Exceptionally, the Purchasing Power Act of
8 February 2008 allowed employees to cash in all or part of their blocked profit share
until 30 June 2008.
As part of the employee ownership strategy, the authorities encourage the grant of
bonus shares to all employees. In line with this objective, the law of 30 December
2006 offers tax relief to all companies which implement a bonus share plan for their
entire workforce and for employees who agree to keep their shares for at least five
years.
Renovating wage negotiations
Work and activity can only become more attractive if wage negotiations lead to fair distribution of the
gains of economic growth. Wage negotiations also help to revitalise the social dialogue. The lower end of
the sector wage scales is therefore one of the negotiation priorities. Such negotiations take place within the
framework of the new revaluation conditions of the national minimum wage (salaire minimum
interprofessionel de croissance - SMIC).
Wage negotiations
at the lower end of
the sector wage
scales
The government and the social partners have closely monitored wage negotiations
since March 2005. At the Minister for Labour's request, professional sectors with
more than 5,000 employees have been encouraged to engage new wage negotiations
and to raise the lower end of the wage scale to at least the level of the national
minimum wage.
The results on 31 December 2007 were in line with the improvement recorded since
the launch of this operation. Wage scales in three-quarters of the general sector - i.e.
excluding the metal and construction and civil engineering industries - are now based
on the national minimum wage. The remaining sectors are negotiating similar scales.
In order to ensure that sector players continue to adjust their wage scales on a regular
basis, the earned income bill provides for assistance when wage negotiations are
initiated at company level (pursuant to the Labour Code) and for reductions in social
security contributions in the bottom bracket of the sector wage scale when below the
national minimum wage. The social security contribution reduction coefficient will
primarily depend upon the change in agreed sector minimum wages and the progress
of sector wage negotiations.
New national
minimum wage
revaluation
procedure
Since the middle of the 1990s, the national minimum wage has increased faster than
the median wage, skewing the wage scale and raising the cost of low-skilled labour
despite cuts in employers' social security contributions.
The Earned Income bill modernises the procedure for determining the national
minimum wage. The idea is to align the minimum wage trend more closely with
economic conditions and the pace of wage negotiations. This reform includes the
creation of an independent expert committee to analyse the economic and social
environment and to propose adjustments in the national minimum wage to the
government and the Commission Nationale de la Négociation Collective. This
committee will make its first proposals for the minimum wage revaluation round in
2009. The reform further entails a change in the annual revaluation calendar, which
will be advanced from 1 July to 1 January from 2010 onwards.
France National Reform Programme, 2008–2010
51
2. OPPORTUNITIES FOR EVERYONE
Fighting poverty and exclusion
The proportion of poor people in the French population has diminished since 2000 to
one of the lowest levels in the EU-15. According to Eurostat, the French risk-ofpoverty rate after social transfer payments was 13% in 2006, down from 16% in
2000 and 15% from 1995 to 1999, the lowest rate in the EU-15, after the
Netherlands, Denmark and Sweden. Nevertheless, very broad population segments
remain outside the labour market, relegated to the fringes or condemned to
precariousness or poverty even though they work.
The legislated French welfare system raises certain difficulties. Eligibility for
assistance depends upon someone's welfare assistance status or job search. With
9 different social minima the social welfare system is too complex. Moreover, earned
income is taken into account in calculating assistance. This reduces the incentive to
return to employment and is unfair towards the working poor not entitled to social
welfare.
The Grenelle de
l’Insertion Round
Table
The Grenelle de l’Insertion Round Table33 was a broad dialogue with all
stakeholders, particularly benefit recipients, social partners and local authorities. In
May 2008 this initiative culminated in a roadmap with thirteen action principles and
twelve priority projects, designed to modernise existing integration mechanisms and
adapt them to the poorest. The stakeholders clearly agreed on the priority of a return
to employment and a more secure pathway to work.
The reforms for people in most difficulty will be outlined in the months ahead,
including the priority granted to such people by the Public Employment Service,
improved access to training, the development of suitable means of transportation,
personal microcredits and access to employment for people with a criminal record.
The reforms further include a single integration contract with a suitable legal
framework for the people furthest from employment.
The “Revenu de
solidarité active”
The working solidarity benefit (Revenu de solidarité active - RSA) is a major step
towards the objective of reducing poverty by one-third in the next five years to
which the French President is committed. Its deployment is a radical reform of the
French social redistribution system. It increases the incentive to work and makes the
benefits system more transparent for benefit recipients.
The bill for the RSA benefit was submitted to the lower House of the French
Parliament on 3 September 2008. This large-scale reform was preceded by a test
phase, which began in 2007. It has produced good results in terms of implementation
and return to employment for the recipients of the social minima (30% increase in
return to employment in pilot zones compared with control zones).
The RSA is a guaranteed income mechanism like the Revenu Minimum d’Insertion
(RMI - minimum integration income), which it replaces. However, in contrast with
the RMI mechanism, the income increases when a low-income household finds a
job.
• For someone without work, the guaranteed income matches the social
33
http://www.grenelle-insertion.fr/
52
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
minimum. The introduction of the RSA does not change its amount. However,
the RSA simplifies the existing system by merging several social minima into
a single benefit.
• Starting from this basic unemployment income, the income guaranteed by the
RSA mechanism increases in step with the earned income according to a very
simple formula: every additional euro of earned income guarantees €0.62 in
extra income. In other words, the RSA guarantees a constant marginal tax rate
of 38% on an ex-post basis.
• Once earned income exceeds the income guaranteed by the RSA mechanism,
it is no longer supplemented by such mechanism. The point where eligibility
ceases depends upon one's family situation, i.e. from roughly the minimum
wage for single workers to twice this amount or even more for large families.
This mechanism costs €1.5 billion more than the benefits it replaces. This is financed
by a new tax on property and investment income in order to offset the reform's
impact on the budget balance.
Fighting discriminations
Distributing the gains of growth better also requires initiatives to fight discrimination
prohibited by law (on grounds of gender, disabilities, origin, race, ethnic
background, age, state of health, sexual orientation, union activity, religion, political
opinions, etc.). Such discrimination has been spotlighted in recent years, whether in
connection with access to housing, education, private and public goods and services,
or on recruitment or in companies in general (HALDE-CSA survey of February
2008, according to which 25% of the respondents stated that they had been the
victim of and 31% had witnessed discrimination in their company34).
Equal treatment
The complete transposition of European regulations on equal treatment (Directives
2000/43/EC, 2000/78/EC, 2002/73/EC, 2006/54/EC and 2004/113/EC) culminated in
the adoption of the law of 27 May 2008 on various adaptations to Community law on
the fight against discrimination.
In June 2008, France further launched a plan to reform access to employment for
disabled people. Its purpose is to increase the allocation for disabled adults and to
facilitate employment for such people.
Reception and
integration
34
To promote diversity, the Direction de l'Accueil, de l'Intégration et de la Citoyenneté
(DAIC - Reception, Integration and Citizenship Directorate) is actively involved in
the Diversity Charter signed by more than 1,900 businesses and other employers. It
also signs agreements with the unions, Chambers of Commerce and Industry,
industries and businesses. It is preparing a diversity label intended to promote equal
opportunity and diversity in businesses and by all other public and private employers
and to certify the processes implemented. The first labels are expected to be issued in
early 2009 upon the recommendation of a commission bringing together
representatives from the government, the social partners and Association Nationale
des Directeurs de Ressources Humaines (ANDRH - National Human Resource
Managers Association).
Survey for human resource managers on discrimination in businesses, June 2006. .
France National Reform Programme, 2008–2010
53
2. OPPORTUNITIES FOR EVERYONE
Haute Autorité de
Lutte contre les
Discriminations et
pour l’Egalité
The Haute Autorité de Lutte contre les Discriminations et pour l’Egalité (HALDE –
Independent High Commission for Equality and Against Discrimination)35 was set
up in 2004 pursuant to EU Directives 2000/43/EC and 2002/73/EC to investigate
claims received from discrimination victims. 6,222 claims were filed with the
HALDE in 2007, half of which concerned employment (in the private and public
sectors). The criteria most frequently mentioned were origin (29%) and
health/disability (22%). The HALDE is also responsible for promoting equality
through communication actions, awareness campaigns, training courses, studies and
research. Its initiatives are intended to rally the main players in the areas of
employment (large companies, SMEs, employment intermediaries, unions and
employers' organisations), housing (real-estate agencies, private owners, social
housing owners), public services and education.
Lastly, its opinions and recommendations contribute to the fight against
discrimination in public policy.
35
http://www.halde.fr/
54
France National Reform Programme, 2008–2010
2. OPPORTUNITIES FOR EVERYONE
European intervention: the European Social Fund
Community policy on economic and social cohesion is cofinanced by the European Social Fund
through the "convergence" programmes for overseas regions and the ESF's national "Regional
Competitiveness and Employment" programme for 2007-2013. The main purpose of this policy is to
support national, regional and local public policies on employment, training and professional
integration in order to restore growth and employment and to help the players adapt themselves to the
ongoing economic shocks and social transformation processes.
Based on the Community Strategic Guidelines (CSG), France's priorities for the European Social
Fund's contribution from 2007 to 2013 were set by the Comité Interministériel pour l’Aménagement et
la Compétitivité des Territoires (Interministerial Committee for Regional Planning and
Competitiveness) in March 2006. These priorities are outlined in the National Strategic Reference
Framework after broad national and regional consultation of the stakeholders, and align with the
national reform programme. This national ESF programme - devolved for more than 85% - has a
budget of €4.5 billion. Moreover, the four overseas départements will receive €900 millions for the
same period. The ESF's total budget in France is therefore €5.4 billion.
The appropriations for France's national ESF programme for the period from 2007 to 2013 are
earmarked for the following four objectives:
20% will be used to help workers and businesses adapt to economic change by improving
skills. This is done by giving employees access to training, developing apprenticeships and
VAE, improving career path security, maintaining or even increasing employment among
older workers and promoting business creation.
28% will be used to facilitate access to employment in order to prevent long-term
unemployment among young people and improve their professional integration by
strengthening and modernising employment services and proactive employment policies,
particularly for women and migrants.
39% will be used to improve social cohesion and the fight against unemployment for the
people furthest from employment, based on methods combining regional and local
approaches, especially in sensitive urban areas. This could be done by supporting
initiatives to network initiatives in the area of employment, such as Plans Locaux pour
l’Insertion et l’Emploi (PLIE - local integration and employment plans) and Plans
Départementaux d’Insertion (PDI - département integration plans). This approach against
discrimination should be helped by the lessons learned from the "Equal" programme for
2000 to 2006, based on the principle of equal opportunity.
9% will be invested in human capital to improve training systems in order to raise worker
qualifications, to encourage the social dialogue toward better governance, to support
innovative association microprojects and to strengthen transnational and interregional
cooperation initiatives in order to improve the mobility of young people and workers and
the networking of the social partners and non-governmental organisations in order to rally
support for employment and labour market integration reforms.
93.8% of these priorities align with the issues of the Lisbon Strategy. This concentration of themes
reflects the recommendations made after evaluation of the previous programme period. It reserves
financial resources for actions where ESF support has the most significant impact to achieve the
programme objectives on key programme objectives, i.e. access to employment and stronger social
cohesion. Thus it contributes relevantly to the achievement of the Lisbon objectives and makes
Community value added easier to determine.
France National Reform Programme, 2008–2010
55
2. OPPORTUNITIES FOR EVERYONE
Breakdown of national ESF programme appropriations
9,0%
Improvement of social
cohesion and fight against
discrimination: €1,756m
20,8%
40,6%
Improved access to
employment for job seekers:
€1,275m
Adaptation of workers and
businesses to economic
change: €899m
Investment in human capital:
€390m
29,5%
56
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
3
ENSUR
EN SURING
SUR ING PUBLIC FINANCE SUSTAINABILITY
SUSTAINAB ILITY
France's public finance strategy is intended to help it achieve a structural balance close to
equilibrium by 2012. Ongoing analyses and international comparisons have shown the
feasibility of sustainable public policy reforms leading to more effective regulation and
lower expenditure. France's budgetary policies will continue to be governed by the Stability
and Growth Pact, as modified. Under its own rules, application of the Pact will naturally
have to reflect the exceptional circumstances we are currently encountering.
To achieve this objective, a vast series of reforms to modernise government departments is
underway. Launched more than a year ago, the first step of this major drive was to carry
out, together with the stakeholders, a general review of public policies in order to take stock
of the situation and to prepare an action plan. The proposed strategy is clear: an
unprecedented effort has been made to contain expenditure since the government rules out
any increase in taxes and social security contributions. The help of the entire general
government - i.e. central government, social security funds and local government - is needed
to halve the growth rate of public expenditure in constant euros (as in 2008).
The principle of a multiyear budget estimates act adopted in the amended Constitution of
23 July 2008 offers an important tool for the consolidation of public finances. These
estimates require the government departments to look into possible avenues for progress.
They make past commitments more consistent and help balance the public accounts.
Despite the very weak economic environment, spending cuts will allow France to stabilise
the public deficit at 2.7 points of GDP in 2008 and 2009. Assuming this programme is
maintained during the entire legislature, by 2010 public finances will get back on track
towards equilibrium and by 2012 France will achieve a public deficit of 0.5 point.
At the same time, the rules of good governance will be strengthened based on the
conclusions of the general review of public policies (révision générale des politiques
publiques - RGPP) and the general review of the tax system (révision générale des
prélèvements obligatoires - RGPO). The purpose of these reviews is to determine the
adjustments needed to optimise the structure and use of taxes.
Lastly, in order to keep the pension system fair and sustainable at a time when life
expectancy in France continues to increase, the major reform of 2003 will be enriched with
a new series of gradual reforms.
France National Reform Programme, 2008–2010
57
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
Controlling
expenditure
and
improving
the
efficiency
of
public
In line with the objective of a structural balance close to equilibrium by 2012, the public expenditure
growth rate observed over the past ten years (average annual growth of 2.25 %) will be halved to slightly
over 1% p.a. in real terms. Government strategy is to focus the multiyear budget estimates on the efforts
required by each public expenditure originator. All players will have to help control expenditure whether the State or other central government bodies, social security funds or other social security
bodies, or local government - albeit at levels reflecting their charges and room for manoeuvre and
subject to their complete or management autonomy.
Spending control will also be made possible by applying the recommendations of the general review of
public policies (révision générale des politiques publiques - RGPP). Further to the third meeting of the
Council for the Modernisation of Public Policies on 11 June 2008, this review has resulted in more than
330 reform decisions in all areas of the State apparatus.
Defining an overall public finance strategy involving all players
Multiyear budget
estimates act
The Constitutional amendment of 23 July 2008 enriches the Constitution with the
objective of balancing the general government accounts and with an appropriate new
legal instrument: the multiyear budget estimates act. This multiyear budget estimates
act allows the government to present Parliament with the contemplated path for all
general government accounts over a four-year period. The first period is from 2009 to
2012. This therefore supports the path taken to restore public finance equilibrium. The
estimates will embrace all sub-sectors. For the State, the multiyear budget estimates
act includes a three-year budget (2009-2011), the expenditure side of which was
presented during the public finance policy debate (débat d’orientation des finances
publiques - DOFP). Government strategy factors in the RGPP and is based on
precisely calculated measures. Approval by Parliament will make the commitments
accepted by France under the Stability and Growth Pact (SGP) official.
Analysis of foreign experiences shows that the effectiveness of structural reforms is
proportional to their visibility for managers. In contrast with the existing programme,
which is institutionally fragile (since the stability programme is not debated in
Parliament), the multiyear budget estimates act will reflect the objectives adopted by
Parliament. The advantage of this approach is that policy debates and decisions focus
on the medium term and therefore on structural and strategic public finance issues.
On the revenue side, the government has specified how it intends to use the State's
surplus revenues, comply with tax expenditure targets and revenue governance rules.
The law bill presented to the Council of Ministers on 26 September 2008 provides
that, as long as the level of State revenues and social security contributions stipulated
in the multiyear budget estimates has not been reached, new measures with a
downside impact on the level of tax revenues and/or social security contributions will
be compensated, throughout the period of the estimates, by a corresponding increase
in such revenues. Moreover, any surplus recognised during the year compared with
58
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
the estimates in the initial Budget Act from taxes of any kind levied for the benefit of
the State will be fully used to reduce the budget deficit. Finally, the law provides for
the implementation of annual tax expenditure targets to contain the cost of existing
measures and the principle of budget neutrality for new measures.
Control of central
government
expenditure
The objective for expenditure easiest to directly manage - i.e. central government
expenditure - is to stabilise expenditure in constant euros ("zero real spending
growth"). Due to the rising debt service burden, pension liabilities and revenue
transfers, this unprecedented effort requires stabilisation of mission resources in
current euros. Other central government bodies (ODAC) will also be involved quite
directly in the drive to control central government expenditure.
Local government
expenditure
Local government expenditure will be less dynamic in the future, helped by a less
pronounced investment cycle than the previous one and a significant decrease in the
wage bill and welfare spending. Moreover, the government will help local
government entities to control their expenditure. To assist it with this mission, the
Comité des Finances Locales (Local Finance Committee) has set up a special
commission, the Commission Consultative d’Evaluation des Normes (Standards
Assessment Advisory Commission). As announced by the French President, the
overlap of competencies between local government entities will also be examined
from January 2009 onward in order to eliminate inefficiencies and unnecessary
expenses.
Continuing the general review of public policies
To control and streamline public expenditure while improving the quality of public policies, the
government has launched a large-scale public policy modernisation programme, known as the general
review of public policies (révision générale des politiques publiques - RGPP)36.
The reforms already decided mainly apply to areas within the sphere of central government (an
assessment basis of €173 billion, i.e. about two-thirds of the general budget). They represent gross
savings of about €7.7 billion, or roughly 4 to 5% of the scope reviewed. This does not include decisions
taken in the future on the basis of current proposals, especially in the sphere of social security funds.
Replacement of
only part of civil
servants going
into retirement
Only part of central-governement civil servants going into retirement will be replaced.
This will significantly help to control the wage bill, underpinned by the reforms
implemented as part of the RGPP. The Budget Act for 2008 provides for larger staff
cuts with the elimination of almost 23,000 full-time equivalent jobs (see the chart).
This will generate gross savings of about €700 million on a 12-months basis. The
decisions taken at the three meetings of the Council for the Modernisation of Public
Policies will allow the government to reach the objective of replacing only half of all
retiring civil servants in the years ahead.
36
For a detailed description of the RGPP, see the Preparatory Report for the Public Finance Policy Debate,
July 2008, p. 30-39:http://www.performancepublique.gouv.fr/fileadmin/medias/documents/ressources/PLF2009/DOB2008.pdf
France National Reform Programme, 2008–2010
59
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
These structural reforms will generate gains lasting well beyond the period from 2009
to 2011. As the discounted cost of a civil servant's wages over a full career and
pension is about €1 million for public finances, the non-replacement of half of all
civil servants who retire decreases the public debt by €150 billion, i.e. more than 8%
of the public debt in the meaning of the Maastricht Treaty. This measure will
therefore have a major impact on France's public finance through spending cuts.
Change in staff under the Budget Act
(in thousands)
20,0
17,2
13,7
10,0
6,6
5,0
5,4
Jobs in the budget
0,0
-1,0
Full-time equivalent
-4,5
-7,4
-10,0
-9,9
-11,2
-20,0
-22,9
-30,0
-30,6
-40,0
1998
Reform of
administrative
structures
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Major administrative reforms like those carried out in other European countries will
allow France to generate large savings while improving effectiveness and public
services. The most representative aspect of this large-scale reform programme was
the merger of the networks of the General Tax Directorate (Direction Générale des
Impôts - DGI) and the Public Accounting General Directorate (Direction Générale
de la Comptabilité Publique - DGCP) to form the Public Finances General
Directorate (Direction Générale des Finances Publiques - DGFiP).
Moreover, two ministries are the target of particularly symbolic reforms. At the
Ministry of Defence, RGPP-related reforms will interface with the decisions
resulting from the White Paper on Defence and National Security and will be
implemented as part of the future military multiyear programme. The purpose of
these reforms is to optimise the operational potential. This will be reflected in
consolidation of support, a cutback in intermediate echelons in each army and a
60
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
territorial reorganisation around 90 inter-army defence bases. The Ministry of
Justice's judicial map has been reformed and adjusted to demographic trends. 178
Tribunaux d’Instance (lower district courts), 23 Tribunaux de Grande Instance
(higher district courts) and 55 Tribunaux de Commerce (commercial courts) will be
phased out between now and 1 January 2011. At the same time, 7 Tribunaux
d’Instance, 7 local courts and 6 Tribunaux de Commerce will be set up in areas
where courts are lacking.
Controlling social security expenditure, satisfying new needs
Financing health insurance remains a recurrent challenge for the system. With €173 billion in 2007, the
expenditure of the social security health insurance branch is the foremost financing source of the French
healthcare system. Like most of its European partners, France faces challenges raised by the future social
security expenditure trend.
While maintaining the existing quality of the system, correcting its deficiencies and dealing with
increases in healthcare demand generated by an ageing population, the government has made expenditure
control and financial balance its priorities.
More efficient
healthcare
expenditure
Government action focuses on improvement of user service and the efficiency of
the healthcare system in the face of certain shortfalls: unbalanced distribution of
healthcare professionals, segregation between ambulatory, hospital and social
medicine; lack of organisation in ambulatory healthcare; redundant and relatively
inefficient hospital services; and insufficient socio-medical services.
The first reform step was to structure primary healthcare by making the general
practitioner of reference the backbone of the coordinated healthcare system when
the health insurance system was reformed in August 2004. The organisation of
healthcare services has been the subject of in-depth reflection since May 2007.
The government is currently preparing a bill on hospitals, patients, health and
regional development, intended to help structure primary care in France. The law
bill includes a health establishment governance and management reform to make
such establishments more efficient and capable of balancing their accounts.
A vast institutional reform is also underway to set up regional health agencies
(Agences Régionales de Santé - ARS) in order to pool and improve the
coordination of all operational health players. The priority of ARS agencies will be
to improve the healthcare organisation by removing barriers between the
ambulatory, hospital and socio-medical sectors, and by promoting overall crossdisciplinary patient management, especially in cross-disciplinary health institutes.
These agencies will further supervise the implementation of regionalised public
health policies.
Health expenditure
control initiatives
Control of healthcare expenditure will bring health insurance very close to breakeven by the end of 2011. Caisse Nationale d’Assurance Maladie will be showing a
marginal surplus from 2012 onwards. The government has adopted new measures.
Since the Social Security Budget Act for 2008, multiyear estimates have been
improved with the introduction of a table showing the trend of the national
France National Reform Programme, 2008–2010
61
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
healthcare expenditure target over 4 years (3.3 % in nominal terms during the
period from 2009 to 2012) in order to guide expenditure regulation measures.
Inclusion of this target in the multiyear budget estimates bill for the period from
2009 to 2012 improves its visibility for all players. At the end of July 2008, the
government consulted the supplementary insurance bodies as part of the effort to
redefine their contribution to health expenditure financing and to the regulation of
this expenditure.
In line with the fixed contributions for certain medical procedures introduced by the
health insurance reform of 2004, fixed payments for pharmaceuticals consumption,
for paramedical procedures and for transport services were introduced in January
2008 to obtain the funds needed to finance the health insurance covers required for
Alzheimer and cancer patients and for patients requiring palliative care.
Control of medical expenses was also tightened. Thanks to a large-scale campaign
on the use of generic drugs and the involvment of all stakeholders (insureds,
pharmacists, physicians, etc.), the generics substitution rate reached 80%, close to
the European norm. The Social Security Budget Act for 2008 also introduced a
structural reform by virtue of which the Haute Autorité de Santé (High Health
Authority) is given both a medical and economic role, like NICE in Great Britain
and IQWIG in Germany.
The improvement of
the quality of life
for chronic patients
The plan for improving the quality of life for chronic patients (2007-2011) is a
large-scale programme to cope with the growing burden of chronic diseases.
Appropriate and effective therapeutic education need to be developed to get chronic
patients interested in such treatments. Moreover, the government is piloting new
remuneration methods for healthcare professionals (i.e. other methods than fee-forservice systems) in order to improve treatment quality for chronic patients. This is
achieved by raising the value of preventive actions.
Dependence of the
elderly and
autonomy
There are more and more dependent people as the average life expectancy increases
and the population continues to age. According to the projections of the EU
Economic Policy Committee's Ageing Working Group, public expenditure for the
care of dependent elderly people should rise from 0.3% of GDP in 2004 to 0.6% in
2050. In addition to challenge for public finances, the quality of such care will be
an issue.
On 28 May 2008, the government announced guidelines intended to create a "fifth
social insurance segment" for the care of dependent people. These guidelines
include four key objectives for 2012:
•
Keeping dependent elderly people as much as possible at home;
•
Increasing the host capacity of homes for the elderly and reducing the
remaining expenditure;
•
Offering a long-term financing guarantee for the loss of autonomy;
•
Developing a healthcare governance system for people who have lost their
autonomy.
The State will call on national solidarity mechanisms to finance these measures as
well as individual and group welfare contributions (insurance, mutual insurance,
62
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
provident institutions). A public-private partnership could be organised with these
bodies.
A new mechanism could be introduced based on voluntary, limited contributions
taken from the assets of the elderly after their death. People who apply for
dependence benefits would have to pledge their assets. This contribution would be
paid only by people with high net worth and they would be able to choose between
a full allowance and capped reimbursement from their estate, and a half-rate
allowance if they prefer to keep their assets.
In the longer term, the development of private dependence insurance under
individual and group policies should allow France to deal with the second boom in
the number of dependent elderly people starting in 2025. The government has
announced plans to submit this bill to Parliament towards the end of 2008,
concomitant with an in-depth consultation of the stakeholders.
The provision of an
appropriate
childcare solution
for every family
Family policy makes a large contribution to France's demographic momentum. By
promoting a harmonious balance between family life and professional life, it boosts
employment and improves gender equality. Owing to its redistributive nature, it is
an essential instrument in the fight against poverty. This policy also generates tax
revenue by raising the proportion of working women. It receives high
appropriations, including €47 billion for the family and mothers, i.e. 9% of social
security benefit expenditure. The government now wants to promote the availability
of childcare services, using measures to encourage every existing public or private
childcare arrangement.
The fact that the government has opted for making care services for young children
one of the priorities of family insurance has allowed it to support the birth rate and
to help families reconcile a professional activity with a child's arrival. The
government's plan to implement gradually a right to childcare calls for a stronger
effort in this direction. The idea is to provide families with centralised assistance to
look for childcare arrangements, to help them find a solution geared to their needs
and to provide parents with more information about existing solutions and subsidy
mechanisms which they may be entitled to.
Compensation
system for
occupational
injuries and
diseases
The major objective of the occupational injuries and diseases insurance branch
(AT-MP) in the next few years is to raise occupational health protection standards.
The AT-MP branch is already essential in this area but standards need to become
the priority, especially in the area of prevention. Rates analysis needs to result in
even more prevention-oriented rates, particularly by enhancing the transparency of
discount and premium mechanisms.
The government may also examine improvement of damages, in line with the wish
expressed in the agreement on the prevention, pricing and compensation of
occupational injuries and diseases signed in April 2007 by the social partners,
especially to improve prevention of professional dropout in order to make it easier
to return to work.
France National Reform Programme, 2008–2010
63
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
Review of
exemption
mechanisms and
"contribution
shelters"
Social security contribution exemption measures at the service of employment
policies, regional development and certain economic sectors amounted to €33
billion. The State generally pays these in the form of a compensation to the social
security schemes. The government wants to improve evaluation of the impact of
such mechanisms, to limit the period of eligibility and to make sure the creation,
extension or prolongation of exemptions is preceded by an impact study.
The government is moreover looking into the so-called "contribution shelters", i.e.
tax relief mechanisms which do not create rights to social benefits. The loss of
revenue resulting from such shelters is approximately €9 billion. The Social
Security Budget Bill for 2009 proposes a tax on part of these shelters, the so-called
"social fee".
The multiyear budget estimates bill sets annual exemption and relief targets to keep
the cost of these mechanisms within specified limits. The bill further introduces a
rule for new measures, according to which any loss of revenue due to "contribution
shelters" must be offset by savings in the same amount, the so-called "pledge rule".
The fight against
fraud
The fight against fraud will help consolidate public finances and maintain social
cohesion: a social protection system based on solidarity is not sustainable if it
permits fraudulent activities. The government has taken measures to strengthen
inspection powers, to develop information exchange procedures between social
security bodies, the tax administration and the judiciary, to hold businesses
accountable and to make the recipients of benefits and health professionals also
accountable through effective enforcement of the penalties provided for in the
French Social Security Code in the case of proven fraud.
In April 2008, the authorities set up new structures responsible for coordinating the
policy on the fight against social security and tax fraud:
•
The Comité National de Lutte contre la Fraude (National Anti-Fraud
Committee), the body responsible for setting anti-fraud policy, whose
membership includes all ministers concerned;
•
The Délégation Nationale de Lutte contre la Fraude (National Anti-Fraud
Delegation), an administrative body which coordinates the work done by
governement departments and the social security organisations.
An organised, identifiable administrative network has been set up at the level of the
social security organisations with the creation of a Fraud Directorate for each social
security branch and the appointment of local contacts for pooling good practices
and knowledge.
64
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
Streamlining taxes and social security contributions
In July 2008, the government laid down the steps of a tax policy intended to promote corporate
competitiveness, to make France more attractive and to improve environmental protection. In the months
ahead its impact will become visible in caps on tax shelters to ensure fair taxation, modernisation of the
rental values used for calculating local taxes, various environmental taxation measures and a local
business tax reform to eliminate the most harmful effects of this tax on the competitiveness of France's
businesses.
Restoration of public finance equilibrium by 2012 is achieved by keeping the rate of taxes and social
security contributions constantly at 43.2% of GDP.
Taxation in the service of a more competitive economy
Faced with mounting global competition France needs to become more competitive and attractive. After
the reform of the research tax credit (crédit d’impôt recherche - CIR) under the Budget Act for 200837,
two further reforms have been adopted to reduce the negative impact of two taxes which seriously hinder
activity: the annual flat-rate corporation tax and the local business tax.
Elimination of
annual flat-rate
corporation tax
Local business tax
reform
37
One of the main decisions taken by the government for 2009 is to eliminate the
annual flat-rate corporation tax (impôt forfaitaire annuel - IFA). This will be done
in three steps, in each of which the tax brackets will be modified. The first
beneficiaries would be businesses with sales of less than €1.5 million, which would
no longer be subject to this tax from 1 January 2009 onwards. Effective from
1 January 2010, the tax would cease for businesses with sales of less than €15
million. On 1 January 2011, the annual flat-rate corporation tax would be repealed
altogether.
The local business tax has no equivalent in other European countries. It hinders the
growth and competitiveness of the French economy. It directly penalises businesses
investing in France and particularly affects sectors most exposed to international
competition and relocation, such as the manufacturing sector. However, the local
business tax is also a key source of financing for regional authorities. The National
Conference of Executives of 10 July decided to consult the stakeholders on this
issue in the autumn of 2008. This dialogue will be looking at economic aspects,
particularly the consequences of the reform for regional government budgets. The
stakeholders will have to find a fair balance between these constraints and develop
a modernised tax system that is better geared to local needs, fairer for taxpayers and
less burdensome for the French economy. As explained by the Prime Minister, this
process will have to culminate rapidly in a local business tax reform which restores
the attractiveness of French territory, especially for the manufacturing sector.
See the paragraph on the research tax credit, p. 27.
France National Reform Programme, 2008–2010
65
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
Fairer taxation
The Budget Bill for 2009 caps three tax breaks available to certain households and not currently limited
(tax shelters).
Caps on tax shelters
Recent years have seen a sharp increase in tax shelters. This not only creates a
problem for the budget, it is also unfair since it means that two taxpayers with the
same income or assets may have a significantly different tax burden. This
difference in treatment is most obvious in the case of breaks without a cap, allowing
some high net-worth individuals to avoid paying any tax at all. This is why the
government first wants to cap tax shelters, for which it has proposed concrete
measures in a report submitted to Parliament on 7 May 2008.
The Budget Bill for 2009 includes a series of measures intended to cap tax shelters
in order to end the unfairest situations. A time limit will be proposed during the
parliamentary debate. At a later date, the government will overhaul tax shelters in
order to verify their relevance and usefulness.
Modernisation of
rental values
In the same spirit of fairness, in the months ahead the government will also propose
measures to modernise the rental values underpinning local taxes (residence tax,
property taxes and the property component of local business tax). These rental
values have not been revised for almost forty years and are far removed from the
real value of the properties in question. The contemplated measures, already
submitted for consultation to the leading associations of elected local officials, are
intended to adjust the tax burden to actual property values in order to promote equal
treatment of taxpayers. These initiatives will also eliminate undue transfers between
authorities and so ensure fairer, more modern and more effective property taxes for
regional authorities.
Taxation in the service of sustainable growth
Further to the Grenelle de l’Environnement Round Table, the government has taken several initiatives to
put taxation in the service of sustainable development. Three measures will be introduced to reduce
greenhouse gas emissions and to improve the energy efficiency of buildings. They are: an interest-free
eco-loan ("éco-PTZ") for existing buildings, a greening of interest-free loans for first-time buyers of new
homes and the right to deduct a higher amount of interest on loans for homes with high energy efficiency.
The government has also introduced measures to increase the general tax on polluting activities (TGAP),
applied to incinerated waste and landfilled waste. The sustainable development tax credit will be
refocused on the most efficient equipment and extended to lessors and to the cost of labour for insulating
walls.
Lastly, the environmental responsibility bill provides that a report on the feasibility of a climate-energy
tax must be presented to Parliament before the end of 2008. Such a tax can only be introduced if it does
not affect household purchasing power and if the market price of fossil fuels does not reflect the
environmental cost of their consumption.
66
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
Guaranteeing the financing of the pension system
Like other European countries, France needs to adapt its pension system to make it sustainable as the
population continues to age. The French pension system is up against a borrowing requirement which,
according to the Conseil d’Orientation des Retraites (COR - Pensions Steering Council), should rise
from €4.2 billion in 2006 (0.2% of GDP) to €24.8 billion in 2020 (1.6% of GDP).
This borrowing requirement is primarily caused by increasing life expectancy, to which is added the
consequences of the baby boom. The flow of people turning 60 has risen from about 580,000 p.a.
(generations born before 1945) to 800,000 (generations born in or after 1946). France suffers moreover
from particularly low employment of older workers. The proportion of people aged 55 to 64 working was
38.1% in 2006, compared with an average of 43.6% for the European Union. Employment of older
workers is especially hurt by extensive use of early retirement mechanisms.
With the law of 21 August 2003, France has launched a pension reform process with measures intended
to guarantee the long-term sustainability of the pension schemes, to make the rules fairer and to increase
freedom of choice. Foreign examples show invariably that such reforms call for in-depth analysis and
major educational efforts in order to come up with balanced solutions, in some cases involving an
overhaul of the pension system structure. To track the progress of the reform process and to oversee the
necessary adjustments, this landmark law also laid down the principle of a four-year review of the
pension system (2008, 2012 and 2016), following a government report based on the conclusions of the
work done by the COR.
The 2008 review led to many adjustments and reforms, especially of the special regimes and measures to
promote employment of older workers. This point will be reviewed again in 2010, particularly to
determine improvement in the employment rate of older workers and to examine the financial
sustainability of France's pension system.
Ensuring equality among pension schemes
Since the consultation and the debates in 2007, the special pension schemes (for 2% of the working
population, mainly employees of public institutions and enterprises) have been reformed to align them
with the civil service scheme. This reform was especially necessary to ensure equal treatment among
workers. The contribution period will be gradually raised to 40 years of insurance by 2012 and will reach
the contribution period applicable to all other schemes by 2016. Forced retirements will be discontinued,
while a premium and a discount will be introduced - as for pension schemes under general law provisions
- and pensions will be indexed to prices with effect from 2009. Moreover, new employees recruited from
2009 onwards will no longer be entitled to bonus time calculated into the insurance.
Balancing pension schemes
The 2008 review has sparked an extensive series of reforms to meet the commitments made in 2003.
After consulting the social partners, the government announced on 28 April the objectives adopted to
ensure proper application of the law of 21 August 2003, to step up initiatives to promote employment of
older workers and to strengthen solidarity with the poorest pensioners. These measures will be
implemented as part of the Budget Act and the Social Security Budget Act for 2009. The authorities will
endeavour to balance the general scheme by encouraging employees to postpone their retirement (by
raising the premium rate) and by using revenues available in other social security insurance branches.
France National Reform Programme, 2008–2010
67
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
Sufficient revenues
to balance the
accounts
The significant and lasting improvement of the financial situation of unemployment
insurance, owing to surpluses generated by the decline in unemployment, makes it
possible to redeploy surplus revenues. The government plans to raise old-age
contributions in three steps from 2009 to 2011 (+ 0.3% in 2009, + 0.4% in 2010 and
+ 0.3% in 2011), which would coincide with a concomitant decrease in
unemployment insurance contributions. This adjustment would therefore not affect
the rate of labour-based contributions.
Encouraging longer careers
In line with the objectives of the Lisbon Strategy, the 2003 reform to promote employment for older
workers endeavoured primarily to provide incentives to keep working and to remove mechanisms which
oppose this. This policy was continued by the Plan National d’Action Concerté pour l’Emploi des Seniors
(National Concerted Action Plan for the Employment of Older Workers) of 2006.
Pursuant to the law of 2003, which lays down the principle that insurance payment periods should be
extended in proportion to gains in life expectancy, the period of insurance required to benefit from a full
pension will be increased by one quarter per year to 41 annuities on 1 January 2012. This measure raises
the average pensionable age, one of the key parameters of the financial sustainability of such schemes. In
order to provide security for insureds who continue to work after they turn 60, the law guarantees that the
insurance period required for the full rate remains the period applicable on the insured's 60th birthday.
The government has adopted a series of measures to ensure that the increase in the number of annuities
goes hand in hand with an increase in the employment of older workers. The age required to benefit from
dispensation of the obligation to look for a job will be gradually raised until this mechanism is entirely
abolished. There will be interprofessional negotiations on employment of older workers, the mandatory
retirement age has been raised from 60 to 65 years of age and will be abolished in 2010 under the Social
Security Budget Bill for 2009, the Delalande contribution has been repealed and the premium mechanism
will be strengthened with effect from 2009.
Ensuring the solidarity of the pension system
Under the solidarity principle, the government wants to boost the minimum amount of the old-age
pension (aide sociale aux personnes âgées - ASPA) for elderly people living alone. It has proposed an
increase of about 5% p.a. until 2012. The government also intends by the same date to reduce poverty
pockets, especially in the agricultural sector, which includes pensioners overlooked in successive pension
increases. Surviving spouses with low pensions will be entitled to a higher survivor's pension,
concomitant with an alignment with the minimum age of eligibility for a survivor's pension (55 years) in
supplemental pension plans.
The 2003 reform had already raised the minimum pension paid out for every contribution. The objective
is a replacement rate of at least 85% of the national minimum wage after a full career, with contributions
based on full-time employment paid at the national minimum wage. The Pensions Steering Council has
shown that this objective would be achieved in 99% of all cases thanks to successive minimum
contribution increases in 2004, 2006 and 2008.
Lastly, in order to preserve the contribution redemption and regularisation mechanisms, redemption
68
France National Reform Programme, 2008–2010
3. ENSURING PUBLIC FINANCE SUSTAINABILITY
conditions and rates will be reviewed to improve actuarial neutrality and to eliminate optimisation
phenomena contrary to the objective of equal treatment.
France National Reform Programme, 2008–2010
69
APPENDICES
Council recommendation on the 2008 update of the broad guidelines for the economic policies of the
Member States and the Community and on the implementation of Member States’ employment
policies
FRANCE
1. In the light of France’s 2007 Implementation Report and the Commission’s assessment of progress
made in implementation of key structural reforms and based on the Integrated guidelines for growth and
jobs, the following conclusions are appropriate:
2. France has made steady progress in implementing its National Reform Programme (NRP) over the
2005-2007 period. The pace of reform has accelerated since mid-2007. France has also shown some
progress in fulfilling the commitment agreed by the 2006 Spring European Council in the four priority
action areas.
3. The Implementation Report shows that some first measures have been taken by France in response to
the recommendations issued to France by the Council but the remaining reform requirements continue to
be of the utmost importance. In other areas identified in the Council conclusions as requiring attention, a
certain number of measures have been adopted; in particular an important reform has been undertaken
with regard to stimulating entrepreneurship and supporting young businesses. The Implementation Report
does not however specifically address the recommendations issued to the euro area countries.
4. Among the strengths shown by French 2007 Implementation Report are: R & D and innovation
reforms; the concrete results of measures in the area of ICT; the priority given to industrial policy (pôle de
compétitivité); the reform aimed at giving more autonomy to universities and the comprehensive set of
measures announced to improve the functioning of the labour market, including through changes in
legislation.
5. The Implementation Report presents a noticeably modified strategy in which employment is to become
a factor of economic policy aiming at enhanced growth. Whilst the second stage of the reform of the
Galland Act has been adopted, full implementation and introduction of new measures remain necessary to
ensure effective competition in services markets. It is important that France further strengthens its
budgetary efforts in order to simultaneously implement a concerted reform strategy and further
consolidates public finances. Significant or sustained further measures are needed to achieve budgetary
consolidation, to increase competition in network industries and to improve labour market performance.
Against this background, it is recommended that France:
•
ensure the sustainability of public finances, taking into account the ageing of the population, by
strengthening the pace of budgetary consolidation and debt reduction, and — cyclical conditions
permitting — aim to reach the medium-term objective (MTO) by 2010. The negotiation on
pension systems scheduled for 2008 will have to build on the important gains made following the
introduction of the 2003 reform,
•
improve the framework for competition in the gas and electricity sectors and take further
measures to strengthen competition in the rail freight sector between competitors and traditional
operator,
•
within an integrated flexicurity approach, enhance lifelong learning and modernise employment
protection, in order notably to combat labour market segmentation among contract types, and
make it easier to switch between fixed-term contracts and permanent contracts.
6. In addition, it will be important for France over the period of the NRP to focus on the following
challenges: further strengthening competition in regulated trades and professions, further enhancing better
regulation policies by including impact assessments; continuing to increase labour supply and making
work pay.
70
France National Reform Programme, 2008–2010
APPENDICES
Council recommendation on the 2008 update of the broad guidelines for the economic policies of the
Member States and the Community and on the implementation of Member States’ employment
policies
EURO AREA MEMBER STATES
1. In the light of the 2007 Implementation Reports of the euro area Member States, and the Commission’s
assessment of progress made in implementing key structural reforms and based on the Integrated
guidelines for growth and jobs, the following conclusions are appropriate:
2. Based on their Implementation Reports, the euro area Member States have been making some progress
in implementing policy measures that improve the functioning of the euro area.
3. Significant further reforms are necessary to fulfil the microeconomic and employment
recommendations. The progress recorded in 2007 concerning the macroeconomic area needs to be
sustained.
4. Among the strengths shown by the 2007 Implementation Reports of the euro area Member States are:
budgetary adjustment in 2007, the implementation of legislation to foster financial market integration, and
wage bargaining systems more conducive to wage flexibility in some Member States.
5. The policy areas in the euro area where challenges now need to be tackled with the highest priority are:
the sustainability of public finances and their contribution to growth; competition in product markets,
especially in services, financial integration and competition in financial retail services, in order to
facilitate adjustment and more flexible prices; adequate wage developments at the aggregate, sector,
regional and occupational level in line with productivity developments in order to ensure competitiveness;
flexicurity in labour markets in accordance with the agreed common principles; and more labour mobility
in order to foster labour market adjustment.
6. Against this background it is recommended that the euro area Member States together with their
country specific recommendations:
• continue pursuing budgetary consolidation towards their medium-term objectives in line with the
Stability and Growth Pact, hence striving to achieve an annual structural adjustment of at least 0,5
% of GDP as a benchmark. The Eurogroup in April 2007 agreed on ‘taking advantage of the
favourable cyclical conditions, most euro area members would achieve their medium-term
objectives in 2008 or 2009 and all of them should aim for 2010 at the latest’. Budgetary positions
where medium-term objectives have been attained should be maintained,
• improve the quality of public finances by reviewing public expenditures and taxation and by
modernising public administration, with the intention to enhance productivity and innovation,
thereby contributing to economic growth, employment and fiscal sustainability,
• effectively implement measures that improve competition, especially in services, and step up
measures that promote the full integration of financial markets and the competition in retail
financial services, whilst strengthening stability arrangements and supervisory convergence,
•
improve flexibility and security on labour markets, inter alia, by implementing flexicurity
principles tailored to the specific circumstances of each Member State and fully compatible with
sound and financially sustainable public budgets, better aligning wage and productivity
developments so as to enhance growth and competitiveness, and enacting measures to promote
labour mobility across borders and between occupations.
7. To maximise policy synergies, which are stronger in a monetary union, and enhance political ownership
of reforms, euro area Member States should continue to strengthen policy coordination in the context of
France National Reform Programme, 2008–2010
71
APPENDICES
the Eurogroup and in international forums, and existing agreements for the external representation of the
euro area should be fully implemented. This would significantly contribute to successfully addressing
policy challenges within the euro area and in the global economy. The Eurogroup’s April 2007 Berlin
orientations on public finances are a welcome step in this regard. Euro area Member States are invited to
take into account these recommendations in their national policies. The Eurogroup will regularly review
their implementation.
72
France National Reform Programme, 2008–2010
APPENDICES
LIST OF ABBREVIATIONS USED
Abbreviation
AERES
AFIC
AFSSAPS
APJEI
AGF
AII
AMF
ANPE
ANR
APE
APU
ARCEP
ARS
ATMP
ATS
BII
CFE
CHSCT
CIF
CIR
CNRS
CODICE
COR
CRE
CRTS
CIVIS
DAIC
DCL
DGCP
DGFiP
DGI
DIF
DRE
Explanation
Agence d'Évaluation de la Recherche et de l'Enseignement Supérieur
(Research and Higher Education Evaluation Agency)
Association Française des Investisseurs en Capital
Agence Française de Sécurité Sanitaire des Produits de Santé (French
health products safety agency)
Aide pour les Jeunes Entreprises Innovantes (aid for innovative start-ups)
Assurance Générale de France
Agence de l'Innovation Industrielle (industrial innovation agency)
Autorité des marchés financiers (French financial market authority)
Agence Nationale Pour l’Emploi (National Employment Agency
Agence Nationale de la Recherche (National Research Agency)
Appel public à l’épargne (public share offering)
Administrations Publiques (general government)
Autorité de Régulation des Communications Electroniques et des Postes
Agence Régionale de Santé (regional health agency)
Accidents du Travail et Maladies Professionnelles (occupational injuries
and diseases)
Accès des Tiers au Stockage (storage access contract)
Brevet Informatique et Internet
Centre de Formalités des Entreprises (business formality centre)
Comité d'hygiène, de sécurité et des conditions de travail
Congé Individuel de Formation (individual training leave)
Crédit d'Impôt Recherche (research tax credit)
Centre National de la Recherche Scientifique (National Centre for
Scientific Research)
Conseil pour la Diffusion de la Culture Economique (Economic Culture
Dissemination Council)
Conseil d'Orientation des Retraites (Pensions Steering Council)
Commission de la Régulation de l'Energie (Energy Regulatory
Commission)
Centre thématique de Recherche et de Soins
Contrat d'Insertion dans la Vie Sociale (social integration contract)
Direction de l'accueil, de l'intégration et de la citoyenneté (Reception,
Integration and Citizenship Directorate)
Diplôme de compétences en Langues (language diploma)
Direction Générale de la Comptabilité Publique (Public Accounting
General Directorate)
Direction Générale des Finances Publiques (Public Finances General
Directorate)
Direction Générale des Impôts (General Tax Directorate)
Droit Individuel à la Formation (individual right to training)
Dispense de Recherche d'Emploi (dispensation from the obligation to look
France National Reform Programme, 2008–2010
73
APPENDICES
EC
EDF
EIB
EPSF
ERDF
ERDF
ESF
FCPI
FCPR
FIP
GDF
GDP
GNL
GPEC
GRDF
ICT
IFA
ILO
IMF
IMI
INSERM
ISF
IUT
LME
MiFID
OECD
OPCA
OPPE
PDI
PES
PLIE
PPAE
R&D
RFID
RGPO
RGPP
RMI
RSA
RTE
RTRA
74
for a job)
European Commission
Electricité de France
European Investment Bank
Etablissement Public de Sécurité Ferroviaire
Electricité Réseau de France
European Regional Development Fund
European Social Fund
Fonds Commun de Placements dans l'Innovation (innovation investment
fund)
Fonds Commun de Placement à Risques (venture capital fund)
Fonds d'Investissement de Proximité (local investment fund)
Gaz de France
Gross Domestic Product
Gaz naturel liquéfié (liquefied natural gas)
Gestion Prévisionnelle des Emplois et des Compétences (forward-looking
labour force and skills management)
Gaz Réseau Distribution de France
Information and Communication Technologies
Imposition Forfaitaire Annuelle (annual flat-rate corporation tax)
International Labour Organization
International Monetary Fund
Internal Market Information
Institut national de la santé et de la recherche médicale
Impôt de Solidarité sur la Fortune (wealth tax)
Institut Universitaire de Technologie (university technology institute)
Loi de Modernisation de l'Économie (Economic Modernisation Act)
Markets in Financial Instruments Directive
Organisation for Economic Co-operation and Development
Organisme Paritaire Collecteur Agrée (Authorised Joint Collection Body)
Observatoire des Pratiques Pédagogiques en Entrepreneuriat (Observatory
of Educational Practices in Entrepreneurship)
Plan départemental d'insertion (département integration plan)
Public Employment Service
Plan Local d'Insertion vers l'Emploi (local integration and employment
plan)
Projet Personnalisé d'Aide à l'Emploi
Research & Development
Radiofrequency Identification
Révision Générale des Prélèvements Obligatoires (general review of the
tax system)
Révision Générale des Politiques Publiques (general review of public
policies)
Revenu Minimum d'Insertion (minimum integration income)
Revenu de Solidarité Active (Working Solidarity Benefit)
Réseau de Transport d'Electricité
Réseau thématique de recherche avancée
France National Reform Programme, 2008–2010
APPENDICES
SARL
SAS
SBA
SME
SMIC
SNCF
SGP
TEPA (loi)
TIGF
TPME
VAE
Société Anonyme à Responsabilité Limité (private limited company)
Société par Actions Simplifiées (simplified joint stock company)
Small Business Act
Small and medium-sized enterprise
Salaire Minimum Interprofessionnel de Croissance (national minimum
wage)
Société Nationale de Chemins de Fer
Stability and Growth Pact
Loi en faveur du Travail, de l’Emploi et du Pouvoir d'Achat (Work,
Employment and Purchasing Power Act)
Transport du Gaz Naturel Français
Très petites et micro entreprises
Validation des Acquis de l'Expérience (validation of knowledge acquired
through experience)
France National Reform Programme, 2008–2010
75