France’s public sector at 25% of workforce- well above China’s ratio
Jean-Luc Mélenchon , a leader of the far left who made common cause with the Communists in this year’s French presidential election, was the wealthiest candidate of the leading candidates while Emmanuel Macron with a new political party defied conventional wisdom and became the youngest leader of France since the 30-year old Napoléon Bonaparte seized power in a coup d’état in 1799.
Based on 2014 and 2016 data the newspaper Le Figaro has reported the public/private sector French workforce ratio as 25:75.
Twenty per cent of the workforce were public servants or fonctionnaires; of 5.4m people, 3.8m had permanent jobs; 17.3% were contract workers and military personnel accounted for 5.6%. The remainder of the number comprised public enterprises and agencies.
In 2013 the Peterson Institute for International Economics, a Washington DC think-tank, reported that the French public/total workforce ratio in France was 27% compared with China’s 2009 ratio of 10%. See chart below.
Also in 2013 China announced that it had abolished its "iron rice bowl" — the system of guaranteed work lifetime employment for most civil servants in government-sponsored public agencies.
Following his meteoric political rise, media reports on President Macron’s first 100 days in office have been dominated by the success of his new La République En Marche! (LREM- the Republic on the Move) party in the National Assembly elections in June and recent polls showing his approval rating falling to as low as 36% — the most dramatic in two decades for a new president.
The LREM won 308 of the 577 seats in France's lower house of parliament and Macron’s allies in the MoDem party took 42 seats, giving the government a big majority.
In the 3-month period, the 39-year old president pulled rank on the head of France’s armed forces over budget cuts; he proposed cutting €5 from a monthly housing benefit that is received by the poor and students, which costs about €16.7bn per year, while suggesting a tax cut that was seen as mainly benefiting the well-off; and this month the parliament overwhelmingly voted for an ethics and transparency bill that places restrictions on politicians hiring relatives, and abusing expenses.
"Aux barricades!" was the street rallying cry of the 1848 revolution in Paris and modern French presidents have a history of surrendering to street protests.
President Macron’s biggest test to date will come next month when changes to the labour code known as Le Code du Travail, will go into effect.
He will have to face down protests or become another failed president.
A New York Times report from Paris says that the Code du Travail is “3,324 pages long and growing. Of those, 170 pages govern firings, 420 regulate health and security, 50 temporary work and 85 collective negotiations. Hundreds more are devoted to wages, specific industries, and overseas departments.”
Last month the prime minister Édouard Philippe told the National Assembly that it was time to end France’s addiction to public spending and reduce public debt.
Macron wants to gain leverage with Germany by cutting the budget deficit and also in July France’s independent auditor reported a funding shortfall in this year’s budget of more than €8bn, meaning that the deficit will again exceed the European Union’s limit of 3% of national income.
Philippe said that for every €100 Germany raised in taxes it spent €98, while France spent €125 for every €117 levied in taxes.
The Foreign Policy blog reports on a study by political scientist Luc Rouban on Macron's new party: more than half of the LREM deputies are new to national politics — compared with 7% of Socialists and 2% of conservative Républicains while women account for nearly 47%of deputies, slightly less than 40% of Socialist deputies and 23% of other main parties.
Rouban found that more than 70% of Macron's party deputies come from the upper-middle class while state employees still dominate the traditional parties. Fewer than 10% of LREM deputies have working-class backgrounds.
Rouban also noted that in the second round of the National Assembly elections about 25% of voters stayed home — the highest level of abstentions since 1969 — while another 10% made the trip in order to register a blank ballot.
Robert Zaretsky, a professor of history at the University of Houston, author of the blog post writes:
"Slightly more than a century ago, the Franco-Italian sociologist Vilfredo Pareto offered an important insight that casts light on the REM phenomenon. In essence, Pareto argued that elites always rule, but that they also change. Or, more precisely, elites always circulate; when one elite begins to wane, another starts to wax. The true tension is not between different social classes, but instead between groups within the same social classes. In the case of the French ruling class, the fonctionnaires who identified with French statism are now giving way to entrepreneurs who are inspired by liberalism of a Silicon Valley variety."
Key French Economic Indicators
Despite France’s economic challenges and its decline compared with Germany some of its key indicators track those of the United Kingdom — both have persistent trade deficits and in the EU15, before the Eastern European 2004 enlargement, France had a real expenditure, PPS adjusted (GDP — gross domestic product — is divided by the number of inhabitants in each country, the resulting real expenditure per inhabitant can be used as an indicator of the relative standard of living of the inhabitants of each country) of 18,800 per capita in 1995; the UK was at 18,200; Germany 21,300 and Netherlands 20,800. In 2016 the levels were 32,500; 33,300; 38,800 and 39,800.
Real (inflation adjusted) average income for the bottom 90% of earners in a country in the period 1950-2013, grew some 70% in the US, dwarfed by rises of 150% in Italy and the United Kingdom, and of a huge 250% in France and Germany. This means that belonging to the “bottom 90%” in Europe was much better than in the US.
The Organisation for Economic Cooperation and Development (OECD) on GDP per capita and material well-being.
In 2016 in a measure of average individual material well-being France was 11% above the EU average as was the Netherlands. The UK was 15% above, and Germany was 22% above. Ireland was 3% below the average.
General government spending including annual capital outlays was 57% of gross domestic product in France in 2015; 44% in Germany; 43% in the UK; 55% in Denmark, and 45% in the Netherlands.
OECD data show that in thousands of dollars per capita, France was at $23,400; Germany at $21,000; the US at $21,000 and the UK was $18,000. Austria, Belgium, Denmark, Finland, and Norway were ahead of France while Ireland was at $20,000.
France has had a trade deficit every year since 2004 while Germany has had a goods trade surplus every year since 1952 and a goods + services trade surplus every year since 1993. The UK last had a trade surplus in 1998.
France's last annual budget surplus was in 1974 while the gross national debt to GDP ratio rose from 22% in 1975 to about 100% in recent times.
According to the OECD, France in 2016 had the highest ratio of spending on social protection (public health + welfare including social-related tax breaks) at 31.5% of GDP compared with Germany at 25.3%; the UK at 21.5% and the Netherlands at 22.0%. Ireland was at 16.1% related to an exaggerated GDP total.
In the fourth quarter of 2016, France had an employment ratio of 64.2% compared with 75% in Germany; the UK at 73.7% and the Netherlands at 75.2%. Ireland was at 65.5% and Italy was at 57.4%.
Thirteen of the mainly rich 35 member countries of the OECD had a ratio in excess of 70%.
Source: Peterson Institute for International Economics
The headline unemployment rate in June 2017 was 2.9% in the Czech Republic; 3.8% in Germany; 4.4% in the UK in April 2017; 6.3% in Ireland and 9.6% in France.
According to the International Monetary Fund, France will have a net public debt of 89% as a ratio of GDP in 2017 compared with Germany’s 41%; UK’s 80%; US at 82%; Netherlands at 33%; Italy at 114%; Denmark at 8%; Sweden at -17% and Finland at -48%.
According to McKinsey, the US consultancy, from the 1970s to the 1990s, the public sector in France created 400,000 to 600,000 jobs each decade. But since 2000, public sector job creation has been drying up. Today, France’s public sector has experienced a net loss of jobs overall
In 2007, the employment share in public, education, and health care was 5.5 percentage points higher than in the EU15 average. Meanwhile, the number of self-employed workers in the private sector increased for the first time in four decades.
The Economist reported in a recent article:
“A smaller role for the state in business is long overdue. A couple of decades after most countries in western Europe sold off many of their corporate holdings, France still has a huge portfolio. According to a report in January by the Cour des Comptes, an independent public auditor, the state has investments in nearly 1,800 firms, holdings which together are worth almost €100bn. The state-owned sector in France employs nearly 800,000 people, the most of all the countries surveyed by the Cour des Comptes (see chart). The number of firms in which the state has a majority stake has been rising since around 2006... The performance of a few big firms, notably nuclear and energy companies, was particularly awful. Most striking is the withering of EDF (Électricité de France), 83.4% owned by the state. The utility’s share price was €86 in 2007 and has fallen to under €9. Despite generating over €71bn in annual revenue, the company, which has enormous liabilities, is valued at less than €26bn.”