French told early retirement must go as OECD sets Europe to work

By Stewart Fleming

Date: 03/03/05

France needs to phase out special early retirement schemes, limit further increases in the minimum wage and lower competitive barriers in the rail, telecommunications and air transport sectors in order to boost growth rates and lower an unemployment rate which has just hit 10%.

This is the message from the Paris-based Organisation for Economic Co-operation and Development (OECD), in a new report, 'Going for Growth'. The report attempts for the first time to carry out a 'deep benchmarking' cross country analysis of the economic performance of its industrial members including France, Germany, Italy and the United Kingdom. It looks not only at statistical differences in performance but is also trying to establish what lies behind apparent differences in performance.

The report will be seen by critics as yet another official attack on Europe's social model. This is not only because it highlights the strong performance of the US and the widening gap between the output per head in the US and EU, but also because of its recommendations for labour market and social policy reform. Germany is urged to create room for reductions in social charges by better targeting of unemployment benefits. The Netherlands and the United Kingdom are advised to curb disability benefits.

The report says that fewer total hours worked per person of working age is the main factor widening the gap between per capita gross domestic product in the US and continental EU countries including France, Germany, Italy, Austria and Belgium over the past ten years. This reflects low participation of working age people in the labour force and high unemployment rates. This effect is reinforced by fewer hours worked per employee owing to both the greater prevalence of part-time work and fewer working hours per year for full-time employees.

In part this is the result of more women entering the work force and choosing part-time employment. But, the OECD says, "the decline in average hours [worked] has gone beyond what can be accounted for" by an increase in people opting for part-time work.

But the OECD warns that increasing employment levels in EU countries with low participation rates could reduce labour productivity measured as output per worker per hour, so widening the productivity gap with the US.

• Stewart Fleming is a freelance journalist based in Brussels.

In a report entitled 'Going for Growth', published on 1 March 2005, the Paris-based Organisation for Economic Co-operation and Development (OECD) attempts for the first time to carry out a 'deep benchmarking' cross country analysis of the economic performance of its industrial members including France, Germany, Italy and the United Kingdom. It looks not only at statistical differences in performance but is also trying to establish what lies behind apparent differences in performance.

• Primary Source

OECD: Economics Department: Economic Policy Reforms: Going for Growth http://www.europeanvoice.com/article/imported/french-told-early-retirement-must-go-as-oecd-sets-europe-to-work/51802.aspx

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