Why France is in Trouble with Its Economy?
Economy of France
Items Rank GDP Statistics 5th (nominal) Nominal : $2,609 trillion USD GDP growth rate -0.2% (Q1 2013) GDP per capita Nominal : $41,141 USD (2012,18th) Inflation rate 2.3%(June 2013) Unemployment rate 11.0%(June 2013) Gov’t debt $2,486 billion USD Gov’t debt to GDP ratio 91.2%(2013Q1)
What’s wrong with France?
What is the problem? 15 years ago public spending as a proportion of GDP was at similar levels in France and Germany. Now France’s public spending, at almost 57% of GDP, is almost 10 points more than Germany’s . Why is the problem? Burdensome welfare measures for old & retired people. The size of the French public sector has become a deadweight dragging down growth. Lack of monetary policy as a tool.
What is the problem? In the past 20 years, Unemployment rate of France has fallen below 8%. Now France’s unemployment rate is over 10% and rising, especially for the young people. The very low employment rates at both age extremes: the employment rate of people aged 15– 24 and 55–64 years old Employment rates, 2013 Q3 Youth(15-24)
France USA 28.5 45.6
Why is the problem?
For the young French not to work: the high minimum wages which prevent low productivity workers from easily entering the labour market, ineffective university curricula that fail to prepare students adequately skills for the labour market. For the senior French not to work: Policies that made early retirement financially attractive. Restrictive legislation on work and incentives for premature retirement also contribute. Regulation: French laws that protect full-time workers have the effect of trapping highly educated youth into temporary and informal employment, because of the difficulty and expense of...
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