What the French and British economies can learn from each other Howard Davies, Director The London School of Economics British Embassy, Paris. 13 October 2005

Evolution du PIB/tête à prix courant (en milliers de Dollars US) de 1980 à 2002 Source: OCDE, dernières données disponsibles 2002

Evolution des taux demploi et PIB/tête en France et au Royaume-Uni depuis 30 ans

Employment statistics for France & UK FranceRoyaume-Uni Population totale61.6 M59.9 M Taux demploi62.8 %71.8 % Taux de croissance0.5 %2.2 % Taux de croissance de lemploi0.2 %0.8 % Total des dépenses en measures actives daide à la création demplois (2002) 12.7 Md1.5 Md Total des dépenses en measures passives (ASSEDIC/Job seeker allowance) 22.4 Md 6.1 Md TOTAL 35.1 Md 7.6 Md Taux de chômage BIT9.8 %4.7 % Source: Eurostat 2003

Quantitativement – Des emplois répartis sur tout le spectre de la population active FranceRoyaume- Uni Δ % Population active dans population totale43.6%49.5%+5.9pts PIB par tête (en millers de US dollars) % Emplois marchands (sur lemploi total)72.7%80.0%+7.3pts Emplois publics (sur lemploi total)27.3%20.0%-7.3pts Emplois dans les services (sur lemploi total)73.5%79.2%+5.7pts Taux demploi des %55.5%+18.7pts Taux demploi des femmes56.7%65.3%+8.6pts Age moyen de départ à la retraite ans Nombre de deuxièmes emplois649,0001,165,000+80% Temps de travail hebdomadaire, temps plein40.7h43.8h+3.1 h Source: Eurostat 2003

Relativiser linstabilité de lemploi au Royaume-Uni FranceRoyaume-Uni CDD3,119 M1,643 M Temps partiel (% de lemploi total) 16.7%25.5% Temps partiel involontaire (% total emploi partiel total) 25.0%9.0% Source: Eurostat 2003

Changes in wage differentials, early 80s to late 90s Source: Inequality and the Sate, John Hills, CASE, LSE

Gains from tax/benefit changes (UK): versus price-linked 97 system Source: Sutherland 2004

Share of the top 1% in income of top 10% Source: Atkinson 2003, quoted in John Hills, Inequality and the State

% agreeing that the gap between the rich and poor is too large USA Japan Northern Ireland Canada Sweden West Germany Great Britain Austria France Spain East Germany Portugal Source: ISSP, quoted in John Hills, Inequality and the State

Why do people live in need? LazinessLuckInevitableInjustice UK Portugal France Sweden EU Sources: BSA survey; Eurobarometer

Current Account Balance of Payments (% of GDP) Source: OECD Factbook, 2005

The Macroeconomic picture on productivity - Relative total factor productivity (US indexed to 100) Source: OMahoney and De Boer, 2002

Management practice scores across countries Management practice alone can account for 10-15% of the U.S. – U.K. productivity gap Source: Corporate assessment interviews; McKinsey/LSE analysis

Management practice assessment scores show greater intra-country variation than inter-country variation (% of companies, by management practice score) U.S: Average = 3.39Germany: Average = 3.2 France: Average = 3.13U.K: Average = 3.07

Consistency with selection and vintage effects when split by competition Implications Higher competition tends to eliminate poorer managed firms so average management scores are higher Younger firms appear to be deploying better Management practices Corporate assessment interviews; McKinsey/CEP analysis

Negative effects of labour regulations Index of firing and dismissal costs (Botero et al 2005) Regulatory bite significantly higher when manager has been in the job for a long time Implies regulations may enable workers and managers to block change Older workers and managers dislike change Heavy firing costs may provide them with the security to oppose change

Trends in cohort size and the number of students passing the baccalauréat exam The size of the chort for year t corresponds to the number of people born at t minus 19 (19 is median age of candidates). The two series are normalised to 1 in Sources: French ministry of Education and French statistical office

The net effects of birth cohort on the probability of having at least a university diploma and on the probability of being in an upper-level white-collar position Sources: French ministry of education and the French Statistical Office