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French unemployment? Lack of companies, French treasury’s poor management

Thursday 22 August 2013, by Nathalie DROAL

IRDEME suggests an explanation of French unemployment based on ten years of research and a hundred of studies, among which about twenty are available on this website. We are creating 200 000 fewer jobs per year than we should because we do not create "gazelles". The French Treasury, which knows nothing about how to launch a business, refuses to follow other countries’ example and is directly responsible for this disaster.

French unemployment? Lack of start-up, French Treasury’s poor management

INSEE conceals that during the last ten years, we have created 200 000 fewer commercial jobs than Germany or the U.K. As this goes on since 1974, 5 to 7 million potential commercial jobs are actually missing in France. This is the main reason of unbearable charges on existing companies, of a too high hourly rate and of our budget deficit.

If we halve companies’ self financing, it creates a vicious circle of job destruction, the Greek way.

There is a very small number of companies (between 3 and 6% of newly created companies) called “gazelles” which create the bulk of jobs. They develop with a product project or a service project. But they are rare in France, and at comparable population, we create three times fewer jobs than the American or the British. For 30 years, our governments have rather encouraged casual jobs and the intervention of inefficient institutions like Oseo Innovation, ex-ANVAR or CDC Entreprises. It did not encourage the development of gazelles, which can only be funded by local banks, like in Germany, or by independent business angels, like in the UK.

We have an equity gap from 2 to 4 billion per year, which should be bridged by independent business angels.

We should create a tax incentive similar to the EIS successfully implemented by the British, one that would encourage the 40 000 households who can afford it to invest more than 100 000 Euros per year in gazelles, with the state taking half of the risk. Given that tax revenues return to the state Treasury before leaving it, the current situation is absurd.

If we want to massively create gazelles and jobs, investment for job creations has to be the most beneficial possibility of our tax legislation. As the British did, we should have a deduction rate of 30% for the tax advantage of Madelin/Florissier, with an investment limit of 2 million for a household and a suppression of the capital gains tax after three years of holding.

Without a smart tax revolution, we will carry on having high unemployment rates, as it has been the case for 35 years.

Wrong solutions:

  - the belief that venture capital supply the creation of gazelles

  - the belief that the state (Oséo or CDC Entreprise) can hold the role of independent business angels