October 2007 10 MYTHS ABOUT FRANCE
Myth N 1:«Once a world power, France is now on the decline.» Reality: World s 6 th largest economic power at the heart of a 493 million strong consumer market in 2006 3 rd destination for FDI after the UK and the USA in 2006 World s 5 th largest exporter of services World s 5 th largest exporter of goods 2
Myth N 2:«France is an old country.» Reality: Sustained demographic growth 14 12 10 8 6 4 2 0 France United Kingdom Sweden Netherlands Spain Poland Italy Germany Crude birthrate / 1,000 in 2006 Source : Eurostat - 2006 3
Myth N 3: «The French are always on strike.» Reality: Low number of working days lost in the private sector due to strikes 80 70 60 50 40 30 20 10 0 Spain Italy United- States France Netherlands Germany Japan Average working days lost due to strikes per year per 1,000 inhabitants (2000-2004) Data source: ILO Yearbook of Labor Statistics 2006 - IMD 2007 4
Myth N 4: «The French are lazy.» Reality: A highly productive labor force 39 37.99 37 35 35.63 35.08 34.47 34.14 33 32.82 31 30.9 30.44 30.42 29.49 29 27 25 Norway United-States France Ireland Belgium Netherlands Sweden Denmark United-Kingdom Germany Labor productivity per hour worked (in 2006) Source : ILO 2007 5
Myth N 5: «France is not business friendly.» Reality: Lower costs for senior managers 200 180 160 140 120 168,014 76,959 170,093 55,148 190,381 78,788 Wages Non wage labor costs 100 80 60 40 20 91,055 114,945 111,593 0 France Germany UK Data : Cross-country comparison of employment costs (in thousands $) Source : European survey of employment costs, Mercer April 2007 6
Myth N 5: «France is not business friendly.» Reality: The cost of living in Paris is less than in most major cities 140 London Tokyo 130 120 110 126.3 122.1 Paris New-York 100 90 80 Moscow London Seoul Tokyo Hong Kong Copenhagen Geneva Osaka Zurich Oslo Milan St Petersburg Paris 101.4 Singapore New-York Dublin Tel Aviv Rome Vienna Beijing Cost of living (real-estate included) [New York City = Index 100] Source : Mercer Human Resource Consulting - 2007 100 7
Myth N 6: «France is deeply conservative and incapable of reform.» Reality: Increased flexibility in the labor market More flexibility in the 35 hour working week: - Statutory limit increased by 220 hours (up to 1827 hrs/yr) - Voluntary overtime beyond the statutory limit - Annual statutory limit for executives and commercial agents New: - Reduced social charges for employers, and income tax and social security charge exemptions on overtime hours for employees 8
Myth N 7: «French taxes are stifling.» A more competitive fiscal system : Reality: - Maximum income tax rate reduced to 40%, like in the UK - Capital gains from sales of shares are totally exempt from tax once the securities have been held for eight years New : - Overall tax rates will drop from 60% to 50%, including direct, national and local taxes, as well as CSG and CRDS contributions, starting in January 2008 for taxes paid in 2007 - Applicable households will also be able to take advantage of an increase from 20% to 30% on the tax deductions related to the value of their principal residence, as well as deduct 75% from their wealth tax (ISF) to invest in smalland-medium-sized enterprises up to a set limit of 50,000 per year. 9
Myth N 7: «French taxes are stifling.» Reality: The best research tax credit in the European Union: 30% of yearly R&D expenses, up to a limit of 100 million. Beyond this maximum, it is 5%. 10
Myth N 8: «Investors are fleeing France!» Reality: 18,000 foreign subsidiaries based in France Foreign companies with presence in France employ some 2.3 million workers Source: The Economist Intelligence Unit 2007 11
Myth N 8: «Investors are fleeing France!» Reality: Paris ranks 2 nd for the location of company headquarters in 2007 60 50 40 30 20 10 0 Tokyo Paris USA London Beijing Seoul Toronto Madrid Zurich Houston Munich Osaka Rome Atlanta Source: Fortune «Global 500 companies» 2007 12
Myth N 9: «French economic patriotism is nothing but protectionism.» Reality: 47 Foreign investors hold 46.1% of the French listed companies in 2006 46 45 44 43 42 41 40 2002 2003 2004 2005 2006 Source: Balance des Paiements - Banque de France 13
Myth N 10: «France is all about food, wine, berets and fashion.» Reality: 14 French companies among world s Top 200 World s Top 200 companies (based on turnover, earnings, and market value) Source: Forbes 2000, 2007 14