•  First, introduce a great degree of selectivity in terms of public spending. Since France is the country in the euro area with by far, as a percentage of GDP, the highest level of public spending, it should give priority to forward-looking spending that supports reforms. From this point of view, a review is necessary in particular of the “defensive” cuts in social contributions that offset the constraints, obstacles and costs facing our companies. These cuts now exceed the equivalent of France’s spending on higher education. More generally, the effectiveness of subsidised contracts in the long term is questionable: they are useful, or even essential, when they allow those deprived of equal opportunities to integrate into the labour force; they are more dubious when, conversely, they financially compensate the effects of rigidities in hiring decisions and the functioning of the labour market. It would be extremely useful to conduct a thorough review of these measures on the basis of this simple distinction. •  Second, reduce structural expenditure. France has a high quality civil service, which is a crucial asset. Current demographic trends and the needs of a modern economy require adjustments to be made. France must have a great civil service in terms of quality but a less bloated one in terms of quantity. The reforms implemented over the past decades are not necessarily consistent with this imperative: of all developed countries, France has recorded the greatest growth in public sector jobs.
BIS Review 92/2007  7