…over the past ten years, France has lost competitiveness. In 2000 hourly labour costs in France were 8% lower than those in Germany, its main trading partner; today, they are 10% higher (see chart 2). French exports have stagnated while Germany’s have boomed. An employer today pays twice as much in social charges in France as he does in Germany. France’s unemployment rate is 10% next to 5.8% in Germany—and has not dipped below 7% for nearly 30 years.
…How can the country justify its massive public administration—a millefeuille of communes, departments, regions and the central state—which employs 90 civil servants per 1,000 population, compared with 50 in Germany? How can France lighten the tax burden, including payroll social charges, so as to encourage entrepreneurship and job creation?
Here is more. Some of the French, by the way, blame the problem on insufficiently low tax rates. Here is an article on Europe, France, and the working poor. In the periphery, of course, the problems are more likely selective regulation, rent-seeking, lack of trust, and sclerotic privileges, rather than the level of expenditure per se, topped off with the unworkable (and ultimately fiscal) commitment to peg the value of their bank deposits in line with those of Germany.