Counting money
11 April 2019

An OECD report confirms the positive impact of structural reforms

The OECD report on the economic situation in France, submitted to the Minister for the Economy and Finance on 10 April 2019, shows that the reforms undertaken by the Government benefit middle- and low-income households in particular.
 
The OECD report confirms the positive impact of structural reforms carried out by the Government on French people’s standard of living, both in terms of job creation and their positive impact on the economy’s productivity:
  • The reforms should lead to GDP per capita growth of 3.2 points within 10 years.
  • Tax relief measures (including the transformation of the solidarity tax on wealth (ISF) into a real-estate tax (IFI) and the €20 billion reduction in employees’ social contributions), should boost per capita GDP by almost 1.5 points.

The impact is positive for all citizens, but particularly for middle-income households and for those with lower incomes. Tax relief measures should, for example, increase the disposable income of lower middle-class households by almost 2 points, and that of middle-income households by more than 1 point.

Where employment is concerned, the report commends the transformation of the labour market, with an unemployment rate of 8.8%. This is the first time in ten years that it has fallen below 9%. The report points to an employment rate lower than that of our neighbours due to a training system which is inadequate. This is precisely why the Government has embarked on a reform of vocational training, which will help resolve the difficulties companies still face in finding the profiles they look for.

With respect to criticism made of the situation of public finances, continued efforts are of course required to reduce the tax burden on French people and to stop the debt from rising. Nevertheless, the improvements made since 2017 need to be recognised: the deficit is at its lowest level since 2006 (2.5% of GDP) and debt has stabilised, even though the SNCF’s debt has been included.

Regarding proposals to abolish tax loopholes, tax fairness is a major issue, of which the importance for French people was borne out by feedback from the great national debate. It is the OECD’s role to put forward further points for discussion.