Would working more solve the deficit problem in France?

A report from the Pensions Guidance Council estimates that if France had the same employment rate as the Netherlands, the gain in terms of overall wealth creation and tax revenue would allow the country to reduce its deficits to almost nothing .

The quantity of work is not enough to finance our social model. This Monday, the Minister of the Economy Antoine Armand took up an antiphon dear to the Macronists since 2017, recalling OECD data according to which the number of hours worked per capita is among the lowest in developed countries.

If the method of calculating hours worked is sometimes contested, what is not, however, is the French decline in terms of GDP per capita for more than a decade. Thus in purchasing power parity, the French produce on average 30% less than the American, 22% less than the Dutch, 15% less than the Dane or even 12% less than the German.

As a reminder, according to IMF data, GDP per capita in France was equal to or even slightly higher than that in the United States in 1980.

For economist Gilbert Cela, president of the Retirement Orientation Council (COR) and professor at Neoma Business School, the main reason for this relative French dropout, particularly at the European level, is explained by “a gap in employment rates” . In other words, the share of the number of employed workers in the total population of working age (15-64 years). It is therefore not a question of making employed French people work more by eliminating a particular public holiday or increasing weekly working hours, but rather of increasing the number of working French people. Which mechanically increases production, therefore GDP per capita and obviously tax and social revenue.

However, according to the OECD, in France this rate was 68.4% at the end of 2023, compared to 72% in the United States, 75% in the United Kingdom, 77.3% in Germany or even 82.5% in the Netherlands. Low with an average of 70.1% within the OECD.

“Three segments where we are bad”

“There are three segments in which we are bad, points out Gilbert Cet. Young people, the low-skilled and seniors. In these three categories, France is behind. The employment rate has improved in recent years but It’s happening too slowly, at a senator’s pace.”

Let’s take a look at the three categories mentioned. First of all, the poorly qualified (without a diploma or with the lowest level of education). Their employment rate in France was, according to the OECD, 53% in 2022, when it was 58% in Spain, 60% in Sweden, 65% in Germany and 68% in the Netherlands.

Young people this time. Among 15-24 year olds, the employment rate in France is 35% compared to 42% in the OECD and well beyond in many countries such as Germany (50%), the United States (51 %), the United Kingdom (54%) and the Netherlands (75%). If France were among the top 3 European countries with the best performance in this area, the country would have one million more young people at work according to calculations by economist Olivier Redoulès of Rexecode taken up by L’Opinion.

Finally, employment of seniors. If for 55-59 year olds, France is above the OECD average with 76% employment rate for this age category, it is at the bottom of the pack for 60-64 year olds. The employment rate barely exceeds 35% compared to more than 50% on average in the OECD and even 56% in the United States, 62% in Germany or almost 65% still in the Netherlands, a model integration in all vulnerable categories.

Improving the employment rate is not just an issue of creating global wealth and therefore in fine purchasing power. It is also a means of financing the social model in a context of major budgetary slippages.

An almost zero deficit

According to a note from the Pensions Guidance Council, if the share of the employed population was the same in France as in the Netherlands, the public deficit would be almost zero.

What is this statement based on? Ultimately a fairly simple calculation. The employment rate gap between France (68%) and the Netherlands (82%) is 14 points, or 20%. Assuming that the productivity of these new jobs which would be largely occupied by young people, low-skilled or part-time workers is 50% lower than current average productivity, we obtain a growth of 10% of GDP compared to its level. current.

However, with an average levy rate of 45% (taxes and social security contributions) on a surplus of 10% of GDP (around 2,900 billion euros today), this represents around 140 billion euros in revenue. additional taxes. The deficit to be financed for 2024, as we recall, should be 166.6 billion euros. With an employment rate equivalent to that of the Netherlands, the French budget deficit would therefore be 26 billion euros, or 1% of GDP, which would make the country one of Europe’s best students in this area. and obviously much better than the United States.

If the objective of improving the employment rate is generally shared within the political class, the means implemented by governments since 2017 are largely rejected. These are the reforms of unemployment insurance, RSA or professional training for the less qualified. Reforms of vocational high schools or apprenticeships for young people. Or obviously the postponement of the legal retirement age for seniors.