Macron-style reforms key to growth: World Economic Forum

Agence France-Presse

Posted at Sep 27 2017 08:27 AM

French President Emmanuel Macron delivers a speech to set out plans for reforming the European Union at the Sorbonne in Paris, France, September 26, 2017. Ludovic Marin, Reuters/Pool

GENEVA, Switzerland - Policies promoting labor force flexibility, like those pushed through by French President Emmanuel Macron, are key to fostering a competitive economy, the World Economic Forum said in its flagship report on Wednesday. 

The Forum's annual Global Competitiveness Report studies a dozen indicators from nations across the globe to assess their growth prospects. 

Perennial winner Switzerland remained atop this year's list, with regular front-runners the United States, Singapore, the Netherlands and Germany rounding out the top 5. 

But Forum economists told reporters that a key finding this year was that labour force flexibility, combined with worker protection, were vital, arguing that both can be achieved simultaneously. 

"Competitiveness is enhanced, not weakened by combining degrees of flexibility within the labour force with adequate protection of workers rights," the Forum said in a statement. 

The report's launch comes as French labor unions and leftist leaders mobilize for what they say will be a lengthy battle against Macron's labor law changes.

Macron's signature reforms aim to give businesses more freedom to negotiate conditions with workers, while also making it easier to fire people and giving higher payouts to those made redundant.

"I think in the case of France, what we have seen ... is too much rigidity in the labor market, which in these times of rapid change prevent the evolution of the economy," Thierry Geiger, the head of research in the Future of Economic Progress department at the Forum told AFP.

"We advocate for flexibility but combined with a safety net," he added. 

Geiger argued that countries like Switzerland and Denmark had proven there was "no tradeoff" between labor force flexibility and worker protection. 

Investing in retraining and unemployment benefits should be a part of the policy mix, the report said. 

Richard Samans, a Forum managing board member and former economic adviser to president Bill Clinton's US administration, applauded moves in France toward "greater flexibility" but cautioned that labor leaders needed to be part of any transition process. 

France languished in 22nd place on the competitiveness index, falling one place from last year. 

Globally, there were no big movers in this year's competitiveness rankings, unlike past reports that have seen Asian giants like India make major strides. 

The Geneva-based World Economic Forum is best known for hosting an annual gathering of the global power-players at the Swiss Alpine resort Davos and has been criticized by some for celebrating the influence of elites. 

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