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AB 2000 studies

Alain Boublil Blog


The worrying productivity fall

During 2023 4th quarter, productivity inside European Union has fallen by 1.2% when it had increased in the United States by 2.6%. In France, the government forecasts a very low growth, between 0 and 0.5% until 2027. Per capita, it had only increased between 2010 and 2023 by 5% and had dived between 2019 and 2023 by 6%. Well, the increase of the productivity is a determining factor of growth, of level of life and of enterprises good health. It is that which has been at the heart of the economic revolutions during these last two centuries in agriculture, with the mechanic equipment, in industry with the machine-tools and the robots and in services with the data treatment by computers. We expect tomorrow with artificial intelligence new and spectacular progresses.

These innovations have allowed to continuously reducing the quantity of work necessary to the production and so of the enterprise costs. The obtained margins have then been utilized to finance the acquisition of the equipment and the necessary research development to get new productivity gains. The progresses have also allowed a continuous reduction of the weekly working time, the instauration of the 5th team in the 3x8 organization in industry and the increased of the paid holidays duration. It is this partition between salaried and shareholders which has made possible, under different forms in the countries, the Welfare-State, at the heart of the European social model.

But this model is running out as are testifying the worrying figures about the productivity trend and the given explanations are not convincing. They risk to occult the true causes. There is first the cost of labor and of the social contributions based on wages which is considered as excessive. When we see the spectacular financial results of the listed companies and the very high disparities between the different sectors, it is difficult to admit the point. There would be too the change of the attitude about working. Employed persons would be less motivated, would look for all the ways to profit from social benefits without working, whatever is the reason, unemployment or disease. It is not more convincing.

This brake of the productivity gains occurs at a time when, to the opposite, we see innovations in all the sectors, especially in services thanks to the generalization of the connections to Internet and to the extension of its utilization. To buy a train ticket; to make a reservation for a room in a hotel or to get cash from the bank are done without recourse to the employees of the related enterprises. The automatization of the assembly lines of industrial products, from electronic components to private cars, remains a creator of productivity gains. But we don’t find the trace in Europe and especially in France.

The origin of this decline then is elsewhere. It finds its source in the growing bureaucratization of the societies. The economic activity is slowing, but not the production of all kind of texts dedicated to the regulation of the daily life of enterprises and of consumers. It is enough to note that in less than 20 years, the size of the different codes (civilian, trade, labor, taxes) has been multiplied by two or three. The source of that worry lays, and the parallel with economy is striking, in the continuous increase of the production capacity of these texts by large superior to the needs generated by the new challenges to cope with as the environment protection.

In France, the increase of the number of members of the Parliament, the extension of the  duration of the sessions, the multiplication of the decisions levels (The State, the regions, the departments, the cities) with, atop of that, Brussels has leaded to a worrying norms inflation. The interdiction of the pluralism has even freed more time to the Parliament members to legislate, to put their names on a bill. Ministers have felt the need to having a growing presence on the media scene and the production of new texts, from shoes repairing to the creation of all kinds of checks submitted to more and more complex conditions needing an increased working charge for all the institutions in charge of delivering them, gives to them that opportunity.

Tens of thousand jobs must have been created in the different administrations to put into place these arrangements, sometimes along with the creations of special entities (Agencies, Independent Authorities, High-Commissionership, Diverse Councils, and so on) and to control their applications. To finance these new expenses, the State has imposed restrictions in many public services. Household and enterprises have been hurt by a double penalty. Their daily life as their activity have been perturbated by all these new arrangements and the controls they generated and, in the same time, the quality of the essential public services to which they were attached like health or the delivery of identity documents for instance, and they have financed, did not stop to be deteriorated. When in France the level of taxes was among the highest in the world, the benefits they can legitimately expect from them, were progressively disappearing.

The bureaucratization of the society, atop of the discontent, has also had major economic consequences because all these new jobs do not contribute to wealth production and even sometimes were blocking it. These non-productive expenses were a factor of the aggravation of the public deficit and indebtedness. We were in the opposite situation to the traditional Keynesian scheme. When the budgetary policy had as a mission to support growth and employment when it was necessary and to realize long-term investments, these public expenses leaded, to the opposite, to penalize activity.

As another consequence, these new charges are not equally supported by all the enterprises. The big groups have at their disposal in their workforce enough qualified personal to get informed about the occurrence of new regulatory constraints, to evaluate if they must be applied to the enterprise activity, to be aware about their respect and to manage the eventual disputes. But it is not the case regarding small and medium enterprises. In most of the cases, it will be the executive duty, atop of his daily activity, to take in charge all these new constraints and he will have to do it during his supposed free time. The peasant world, which everywhere in Europe has protested against what it could be qualified as a “norms delirium”, has been its main victim.

Bureaucratization doesn’t weight only on productivity, on growth and on public deficits. This phenomenon affects the deep structures of the economy, the industrial network as agriculture. France the country of Colbert, is especially concerned because administration takes a privileged place. The élite formation mode gives a large place to the recruitment of high civil servants who become after big enterprises executives or political leaders. These carrier profiles do not naturally prepare them to measure the damages created by the bureaucracy and to make these practices upgrading.

But the current situation with a true growth failure and a lasting weakening of the productivity gains can contribute to a salutary taking into conscience. If not, the growing and legitimate discontent of the different social categories of the population risks to lead to the coming into power, and not only in France, of extremist political forces which will put into question all the economic and social progresses registered for more than half a century without, in that case, offering a solution to the current difficulties.