The emergency plans will succeed to restart jobs in France, but the course changes create uncertainty that do not encourage investment or hiring. The CICE, cornerstone of a restart in 2013, will be transformed into a more drastic decline in expenses, which could have intervened earlier.
The sway gives the impression of hesitating on the Cape forward is necessarily against-productive for the government. In its emergency plan against unemployment presented January 18, Francois Hollande has not avoided this by announcing, among the measures adopted, the transformation of the tax credit for Competitiveness and Employment (CICE) down sustainable social security contributions. A change of direction in the name of clarity on the social contributions of companies, which punishes the lack of results of the IECC in its current version.
This device aims to lower the cost of labor to implemented in France to encourage businesses to invest and hire. Introduced in the 1 st in January 2013, it consists of a tax credit calculated on the total gross wage less than 2.5 times the minimum wage.
It was a beginning of the flagship innovation the current five-year term. For the abatement, increased from 4% of the amount of the payroll concerned in 2013 to 6% in 2014, is far from trivial: it carried a total of 11.2 billion euros in 2013 and 18.2 billion the following year, benefiting from the first year to nearly 750,000 companies -the SMEs and midcap companies (ETI) benefiting about half of the envelope.
The gas plant Funding
But the system was originally sealed by its complexity. Why a tax credit rather than a reduction in contributions? In France, the share of social responsible for the employer reached 33.1% of the hourly cost, according to Eurostat institute; it is also the highest in the European Union. However for the executive, it was time to push in the loss of government revenue generated by a fall, the worker tax credit for construction with an offset for the year concerned. Thus, he earned the state a year before the abatement is felt in the public accounts.
According to INSEE, half of the companies that have benefited the also used to improve their operating results
However, this budgetary gymnastics that does not harm the effectiveness of the system, banks -and especially Bpifrance- public investment bank were called to the rescue to pre-finance the tax credit to be entered the following year. A real gas plant, involving additional steps for small business owners, priority targets of the system but can not always rely on administrative services dedicated to such tasks.
So assista- are we in a strange situation in which, at the beginning of the establishment of CICE, bosses soon to seize the opportunity that was given to them to reduce their costs … so they stopped to seek relief.
In addition, while it is primarily intended to support investment and hiring, the IECC has been hijacked as: according to Insee, half of the companies that have benefited the ‘also used to improve their operating results or raise dividends paid to shareholders. Without necessarily invest or hire.
The device was therefore penalized by its complexity, and the expected results take longer to be felt despite the importance of the sums involved. From the outset, the fears were issued.
Great blurred that penalize the system
Also, since the end of 2013, a transformation of this credit Tax expense was down already mentioned. And early 2014, presenting the pact of responsibility, Hollande seemed to move in that direction, before returning this transformation to 2017 -this Emmanuel Macron, Minister of Economy, confirmed in 2015. No one, however, knows the modalities of future relief costs, nor their scope.
But when the executive seems to hesitate, uncertainty is growing among entrepreneurs. Which is not conducive to the commitment of investments involving a debt over a long period. Neither hiring. What the figures confirm.
In a year end 2015, the French economy created only 37,600 jobs will (excluding temporary) in the market sector, according to Insee. A failure for employment policy in France mired in persistent unemployment around 10.6%, according to calculations by the institute Eurostat for the European Union, while Germany is that ’4.6%, UK 5.4% and that Belgium, the Netherlands, Denmark, Sweden, Austria, Poland, Romania … all show rates oscillating between 6 and 7 %.
In its new emergency plan for jobs and growth, the head of state confirms early 2016 the option that had been considered two years ago, giving it a more formal without raising uncertainties about the terms and scope.
A factory of discontent
One could for example imagine that future declines loads go beyond wages equal to 2.5 times the minimum wage, not to exclude from the scope of the companies those that use a large number of engineers and managers who are most often internationally oriented, in competition with companies from other countries where costs are lower.
Francois Hollande will now wipe the onslaught of the unions and the left left
The debate had already taken place when he had to draw the line at CICE. It could again become topical. But no details are given to date. But as the uncertainty is not lifted, investment and hiring decisions can be postponed. This is contrary to the intended objective.
Finally, this procrastination relief on charges that have taken the form of a tax credit before being transformed four years later in a fall more radical could have been decided from the beginning in 2013 does not give the impression that the executive has a clear vision of the situation of businesses and an assertive strategy to conduct operations to restore competitiveness and employment.
And politically, the course changes feed oppositions: after being criticized in 2013 by the employers’ organizations for the CICE although they encouraged their members to use the device, Francois Hollande will now wipe assaults trade unions and the left of the left who already accuse him gifts to bosses, while employment can not be decreed. The question is whether the conditions will be established to take advantage of lower costs, and why. Uncertainty still …
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