Economic Policy Reforms 2023

France

See more data for France on the related dashboard.

Product and labour markets functioning

Performance gaps

• The short supply of housing in fast-growing areas prevents greater housing mobility and employment, especially for young people.

• Tax expenditures are considerable and the effectiveness of some measures, such as tax exemptions for working overtime and household saving incentives, is weak.

• The quality of lifelong learning programmes is uneven, and the COVID-19 crisis halted the roll-out of quality labels for training bodies.

Recommendations

• Refocus the eligibility of housing-supply subsidies to the most densely populated areas.

• Allocate responsibilities of local infrastructure and urban planning to groups of municipalities to better address environmental and other spill overs.

• Streamline local government organisation by merging small municipalities.

• Reduce tax expenditure, in particular expenditure that does not benefit low-income households or measures that encourage excessive household savings.

• Ensure access to transparent information and effective monitoring of the quality of lifelong learning programmes, through strengthened counselling and regular evaluations of programme providers.

Digital transition

Performance gaps

• Digital infrastructure, notably the roll-out of superfast broadband and the use of e-government procedures have improved, but the take-up of digital technologies by small businesses remains low.

• A lack of training among managers and employees, and poor knowledge of support mechanisms act as a barrier to the take-up of digital technologies.

Recommendations

• Provide financial support for training in digital technologies for small businesses.

• Establish local one-stop shops providing a range of activities to support human resources practices in small businesses.

Inclusiveness, social protection, and ageing

Performance gaps

• Despite progress over recent years, the employment rate remains relatively low. In particular, the effective age of exit from the labour market is low.

• Improving access to good-quality early childhood education and lifelong learning are also essential to reduce inequality in opportunities, disadvantaged households having less access to formal childcare arrangements.

Recommendations

• Encourage a rise in the effective labour-market exit age, notably by increasing the minimum retirement age in line with life expectancy.

• Speed up the development of additional childcare services for low-income households and in disadvantaged neighbourhoods.

• Continue to reduce class size in disadvantaged neighbourhoods and promote innovative practices in teacher training to meet the different needs of pupils.

Climate transition

Performance gaps

• France’s level of emissions is low. Yet, the pace of emission cuts must accelerate to reach its target of carbon neutrality by 2050. Carbon prices remain uneven across sectors.

• Some support schemes for building renovations do not encourage efficient energy renovations.

• Land take continues to increase.

Recommendations

• Progressively align carbon prices across sectors while resuming the gradual upward trend of the carbon component of energy taxes.

• Condition support schemes for building renovations on achieving minimum energy-efficiency standards and tighten controls on major projects to ensure energy-efficiency gains.

• Reform the planning tax to integrate a “bonus-malus” scheme to discourage land take and encourage densification.

Overall performance