CNP | Summary of the 5th report

Following a brief introduction recalling the economic context—still marked by persistent challenges, as highlighted already in CNP (2023)1—this fifth report presents a threefold analysis. First, Chapter 1 examines in detail the evolution of labour productivity in France since 2019, both in comparison with its main trading partners and relative to its pre-Covid trend (2010–2019). Chapter 2 provides an in-depth analysis of the development of France’s competitiveness since 2019 and explores the sensitivity of its export market shares, particularly in relation to the European average. Finally, Chapter 3 reviews recent developments in the adoption of digital technologies in France—including artificial intelligence and robotics—benchmarking them against trends observed in other European countries and the United States. It also assesses the productivity gains associated with these technologies across a broad sample of firms.

Three key findings emerge from these analyses. On the one hand, although the weakness in labour productivity per head since 2019 primarily reflects a dynamic labour market and employment-rich economic growth — which is a positive development for workers’ purchasing power — these job gains can only be sustained through stronger long-term economic growth.

On the other hand, the relative improvement in France’s competitiveness in the manufacturing sector may partly be attributed to a decline in labour costs, particularly in comparison with Germany. However, France’s overall competitiveness—undermined by falling productivity—remains fragile in many respects. First, despite recent reforms, labour costs in France remain higher than the European average, especially in comparison with Italy and Spain, although the gap with Germany has narrowed. Second, the more pronounced increase in labour costs in business services and freight transport (important inputs into industry production) suggests that the lower levels of labour costs in the manufacturing sector could be reversed over time.

This questions regarding France’s future strategic policy choices: either the country opts to invest substantially in innovative technologies – possibly through reindustrialisation – in order to unlock new sources of productivity growth; or – at unchanged quality of exported goods containing (if not reducing further) labour costs in lower value-added sectors will be the only way out to preserve France’s competitiveness.

Finally, our analysis reinforces the previous conclusion, which confirms a significant impact of digital technologies on total factor productivity. Should these technologies become more widely adopted across sectors, and provided that firms and workers develop greater proficiency in their use, a stronger impact on productivity can be expected—particularly from generative artificial intelligence.

However, both Europe and France lag considerably behind the United States in terms of investment in these technologies. This gap can still be closed, but only if the right economic policy decisions are taken today—some of which will likely need to be made at the European level, as suggested by the Draghi Report (2024)2—in particular to stimulate investment in these new digital technologies.

Labour Productivity Puzzle in France since the Covid-19 Pandemic3

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1 CNP (2023), Bilan des crises. Compétitivité, productivité et transition climatique, fifth report, December.

2 Draghi M. (2024), The Future of European Competitiveness, Part A – A Competitiveness Strategy for Europe et Part B – In-depth Analysis and Recommendations, September.

3 The chapter benefited from the working group on productivity launched in 2024 to exchange with public administration and academia about the evolution of productivity in France. This group met six times since then, and, is constituted by Antonin Bergeaud, Gilbert Cette, Grégory Claeys, Bruno Coquet, Galaad Defontaine, Antoine Devulder, Anne Épaulard, François Geerolf, Arthur Guillouzouic, Clément Malgouyres, Antoine Naboulet, Ismaël Ramajo, and Alain Durré as moderator. The French National Productivit Board (NPB) thanks them warmly.