France's companies have made bold strides over the past decade. Once coddled and subsidized by the state, they've gone private, restructured, and become globally competitive. The French government is well on its way to getting out of industrial and financial markets. Even state-owned defense giant Aerospatiale has been told to prepare to float part of its capital.
Prime Minister Lionel Jospin's Socialist government has moved to make the business environment more friendly to entrepreneurs by taking such measures as reducing taxes on stock options, and redirecting a portion of state research and development funding to small companies. And the French economy has responded, with an expected average growth rate of about 2.9% in 1998 and 1999. That would be the biggest two-year growth spurt since the late 1980s.
But there's a long way to go before France shrinks its bloated public sector, eases regulatory burdens, and reverses antibusiness attitudes. Even while some parts of the economy are being liberalized, a new law, which becomes effective in the year 2000, would shorten the workweek to 35 hours, down from 39 today. The state still employs nearly one-quarter of the workforce, with the Jospin government creating additional make-work public-sector jobs.
Moreover, the government continues to mouth leftist rhetoric even while secretly trying to modernize the French economy. The French press is nearly entirely left-leaning and antimarket, while the right-wing political parties are as statist as those on the left.
What's worse, French execs--unlike their American, German, Dutch, or British counterparts--are loath to utter any critique of government economic policy. Their hesitation to speak out is a throwback to a time when outspoken criticism could have nasty political consequences. Indeed, the taboo is still so strong that French CEOs are mostly unwilling to challenge publicly policies that seriously hamper their competitiveness, such as the 35-hour workweek.
Their conspiratorial silence is hurting their companies. Equally important, it's depriving French society of an open debate at an important turning point, when the momentum for change is building. To develop a popular consensus for market reforms, business leaders must find their voice and help coax France into the next century.