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24 October 2012

France: modernisation and competitiveness

As reported earlier this month, intense discussions are currently on-going (following the change of government) in the French political sphere about the future strategies for modernising public administration and making the national economy more competitive. This debate may interest experts as the key proposals are comparatively unconventional. Here is a summary of current trends, from press articles.

The reform of public administration, which had been based since 2007 on a predominantly budget approach (the general revision of public policies), is now replaced by the new concept of "modernisation of public action" which includes three major components: improving the quality of public services to meet the public's expectations, involvement of public officials in the implementation of reforms, prioritisation of administrative programs to ensure that resources match ambitions. There is no mention of streamlining or reducing costs.
The second axis for reform, and much discussed in Government and Parliament, is a "third wave of decentralisation." A new "clarification" of local government competencies will be legislated early next year. Civil servants are already worried that large sections of national administration may be transferred to local authorities, with a reduced status. There has been a lot of discussion since Senator Doligé's report last year, which pleaded for further streamlining national legislation applying to local authorities and known to transfer burdens without corresponding resources. Other economists however point out that transfers towards local government have heavily increased in recent years (+31% between 2003 and 2011.) Several formal events have placed this topic high on the agenda, with for instance a charter of 10 commitments ("engagements") signed by the Prime minister and the president of the association of départements. Another option, for the moment in jeopardy for legal reasons, was to modulate legislation according to the size of the local authority.
The other great topic under discussion, also handled in an original way, is national competitiveness. The contents of a new report to be published next week by Mr Gallois, a well-known CEO, were expected to propose a "competitiveness shock" based on a reduction of public spending of €30bn offset by a significant reduction of social contributions on the lower range of salaries. But even before the report is published, the government has distanced itself from this type of measure, and announced a preference for a "competitiveness trajectory" with reforms aiming at medium term rather than short term results. The Prime minister was careful to state that this not yet filed report "had not been buried." Experts discuss the nature and merits of the "non-cost of labour" competitiveness factors, the comparative "cost-of-labour" theme being widely unpopular for its immediate effect on purchasing power.

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