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France : Twice less businesses, three times less employment created than in Germany

Thursday 26 May 2011, by Rose Blackburry

Is this the best kept statistical secret in France? These figures are not found on Eurostat where newly created businesses and jobs appear similar for France and Germany.

On the contrary, French official statements celebrate the success of start-ups creation without taking into consideration that almost all companies being created are without employee, so that we do not know whether these companies are empty shells.

To avoid this, several international statistics agencies, including the U.S. Census Bureau, consider enterprises with at least one employee, the “employer businesses”.

Considering this criteria, the French disaster in employment and unemployment appears in all its magnitude: for over 10 years, France created half of businesses created in Germany or Great Britain or the USA, at comparable population. On average, there are 2.8 employees per company founded in France against 4.3 in Germany and 6.3 in the USA.

As a comparison, 104 000 additional jobs are created in France each year, 314 000 in Germany and around 425 000 in United Kingdom. Moreover, Germany has 33 million private jobs and 4,5 million public jobs compared to less than 19 million private jobs and 5,2 million public jobs in France.

With an employment rate of the working age population (15-65 years old) of 65,2% compared to 70,7% in Germany and 71,5 in the UK, France does not have a lot of hope to catch up its neighbors if corrective measures are not taken urgently.

These results are in line with a study performed by the OECD («the international comparability of business start-up rates») in 2006, which made corrections on the data used to estimate the job creations, and concluded that the rate of start-ups creation in France is half of the ones in Germany or UK.

But why focus on businesses creation and not on the growth of existing businesses such as mid-size companies (between 250 and 2,000 employees) on which focused the government? As shown recently in a U.S. by a study of the Kauffman Foundation («The importance of job creation in startups and job destruction» - July 2010), existing businesses, including mid-size companies, have little effect on the employment and only employer businesses creation counts.

This has led President Obama to sign recently the «Small Business Jobs Act» exempting Business Angels from taxation on capital gains for investments performed in companies with less than $ 50 million stock in order to accelerate their creations.

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