CNP Report: France Must Make Strategic Choices to Improve Productivity and Competitiveness

Established in 2018, the CNP, chaired by Natacha Valla and hosted by France Stratégie, aims to advise the government on economic policies related to productivity, evaluate their effects, and feed public debate. Through this fifth report, it offers an interpretation of ongoing transformations, often torn between short-term objectives and long-term structural imperatives.

The gap in labor productivity per capita compared to its pre-Covid trend is estimated at 5.9%. This apparent weakness should not be interpreted as a sign of economic stagnation; it primarily results from a dynamic labor market, materialized by job creation. For workers, this phenomenon has led to an improvement in purchasing power, but this decline raises concerns about the sustainability of growth.

CNP analyses show that two-thirds of the productivity decline compared to the pre-Covid trend can be explained by transitional factors: learning, job retention in sectors facing a temporary decline in activity, and labor composition effects (a higher proportion of less skilled jobs). The remaining third, more structural, reveals a potential weakening of productivity growth, shared with other European countries. In the long term, this dynamic could pose a problem if not accompanied by increased investment and productive transformation. Employment growth alone cannot guarantee the sustainability of economic growth.

In terms of competitiveness, recent indicators show some improvement, notably in the manufacturing industry. In 2023, the reduction of France's trade deficit was accompanied by a recovery in its export market shares. The relative decrease in labor costs compared to Germany is one of the levers. However, this evolution remains fragile.

On the one hand, French labor costs remain generally higher than the eurozone average, especially compared to countries like Spain or Italy. On the other hand, cost increases in business services and freight transport—critical inputs for the industry—could quickly call into question the observed gains. Non-price competitiveness remains an issue, as French intermediate, investment, and consumer products are often perceived as too expensive relative to their quality. If these costs continue to rise, efforts to strengthen price competitiveness risk being eroded.

Faced with these findings, France is confronted with strategic choices. Two major options are available:

Finally, the report revisits the still ambiguous role of digital technologies: AI, particularly GenAI, and robotics, in the evolution of productivity. While their overall impact remains, at this stage, modest in aggregate statistics, several elements suggest that an acceleration is possible. Provided, however, a wider dissemination in labor-intensive sectors and an upskilling of workers.

However, France, like the EU, lags significantly behind the United States in terms of technological investment. This deficit of effort, if not quickly filled, could durably weigh on potential growth. The Draghi report (2024), which calls for a strengthened European framework to stimulate competitiveness through innovation, underscores this urgency.

Can France catch up? A sustained investment strategy in digital, supported by both national industrial policies and European instruments, could be one of the most powerful levers to reconcile productivity, employment, and economic sovereignty.