FRANCE: OECD POINTS OUT DANGERS OF WORKING TIME REDUCTION.

Summary:"The reduction in working time presents serious risks", warns the Paris-based Organisation for Economic Cooperation and Development (OECD) in its Economic Survey devoted to France, and published on February 4. The survey notes that the macro-economic policy pursued by France has enabled it to meet the convergence criteria for taking part in the single currency. It notes, however, that the current situation would leave little margin for budgetary manoeuvre in the event of a downturn in the overall economic situation. It therefore urges France to rigidly adhere to a policy of budgetary consolidation in the medium term as well as a substantial reduction in compulsory payroll contributions. by employers.

The OECD survey points out that, whereas the recovery of the mid-1990s was short-lived and weak, the economic growth of the past year and a half, which has been running at an annualised average rate of over 3%, is reminiscent in certain ways of the cycle that France experienced at the end of the 1980s. In both cases, strong foreign demand boosted manufacturing output. French firms have been able to benefit more from the recovery this time thanks to their competitiveness, as attested by a trade balance now in structural surplus. Accelerating domestic demand came on top of buoyant exports, the driving force of the economy this time has shifted to a greater extent to consumption and investment. Another major difference is evident on the inflation front. Whereas consumer...