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The French Economy: An Overview
At a Glance:
- The services sector is France’s biggest employer, employing around 70% of the nation’s workforce.
- Tourism is a particularly important sector: France attracts more than 84 million visitors each year.
- President Macron is looking to reform French economic policy and the introduce reforms to the currently inflexible labor market.
Economically, France is a key player, both on a European and global scale. France has the world’s sixth largest economy, and Europe’s third largest economy after Germany and the United Kingdom.
France’s Key Industries
France has a diverse economy, performing well in a number of different sectors. In fact, the country comes in fourth on the 2017 Fortune 500 list, making it the highest ranked European nation. In total, 29 diverse and globally-recognized French businesses appear in the listing, from BNP Paribas, to Peugeot and Christian Dior, giving a glimpse of the variety of sectors and industries in which France is successful.
As with many Western economies, the French economy has seen various changes over the centuries, evolving from a primarily agricultural and manufacturing-based economy to one much more focused on services.
Agriculture: A Struggling Yet Essential Sector
Agriculture remains an essential part of the French economy, boasting one-third of all agricultural land in the EU. As the world’s second largest agricultural exporter (after the US), France produces and exports a large variety of agricultural products; including wheat, fruits, dairy products, and, perhaps the most renowned French item of all, wine. Despite all this, the agricultural sector is in decline, only employing approximately 3.5% of the French workforce, and contributing just under 2% of the national GDP.
The Secondary Sector: Industry in Decline
Industry in France contributes more to the economy than agriculture does, making up approximately 19% of the GDP, and employing around 14% of the French working population. Some of the key industries in France include electronics, chemicals, telecommunications, defense, textiles, and automobile production. However, French industry is in gradual decline, in part due to increased competition from newly industrialized countries.
France’s Successful Services Sector
The services sector has become the main employer in France nowadays. Service industries are steadily growing, currently contributing approximately 80% of the national GDP, and employing around 70% of the working population. With hundreds of noteworthy attractions spread all across France, the country is the world’s most visited tourist destination, welcoming approximately 84 million visitors every year. Tourism therefore plays a vital role in the French economy, providing thousands of job opportunities and contributing 7% of the country’s GDP in 2016.
Although world-renowned, the significance of France’s fashion industry to the national economy is often underestimated. Fashion-related businesses generate around 150 billion EUR annually, more than the aerospace and automobile industries combined. Unsurprisingly, Paris is the hub of French fashion, playing host to countless boutiques, as well as hosting six Fashion Weeks per year which attract millions of visitors.
Paris is the world’s second largest host to multinational headquarters, with 500 multinational companies currently locating their home office in the French capital. However, in recent years many businesses have been put off basing themselves in France due the inflexible labor market.
May 2017 saw the election of a new president in France, Emmanuel Macron, who has promised a number of economic reforms to boost economic growth. Since the global economic crisis in 2008, the French economy has struggled, seeing much slower growth than its European neighbors Germany and the UK.
Macron has proposed plans to reform the country’s rigid labor laws, which currently restrict businesses when it comes to making decisions about hiring and firing employees. These laws are widely viewed as being the root of France’s persistently high unemployment rate. Unemployment in France is well above the EU average, having been at around 10% for over five years.
There is also some good news for expats looking to move to France to find work: Macron is taking a new and more pro-business approach to economic policy, looking to transform France from a country of rigid legislation and bureaucracy to one of innovation and reform. One measure he will take, for example, is to cut the corporate tax rate from 33% to 25%, opening up the French market to more investment and new businesses.
For more on the economy and the ins and outs of working in France, read our article on Finding Employment in France.
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