Entrepreneurship in France
France has very low rate of entrepreneurship for three major reasons. First, is their lack of entrepreneurial spirit. Furthermore, in French culture, to work as a civil servant or anonymously in a large company is still considered prestigious, unlike other countries with strong entrepreneurial spirits where more workers strive to achieve positions of power and prestige. The French government has created an unfriendly environment for entrepreneurial activity, with their high tax rate, strict regulations, and establishing a large discrepancy in social security tax requirements between wage and self-employed people. The large-scale operations of technology businesses and service industries also leave little room for small-mid sized start-ups.
In France, the unemployment rate stays high despite the high quality workforce streaming from their good education systems and the steadily increasing immigration rate. There is, however, a demand for entrepreneurship to increase employment opportunities. Recently, the French entrepreneurial environment has been changing since new measures, such as an exemption of administrative costs and lower tax rates, were introduced to stimulate small businesses. However, substantial progress has yet to be seen.
The rate of entrepreneurship in France is low compared to the rest of the world or even compared to the rest of the Europe. The main reason is because of the past legislation. The social right developed during the period 1970-2000 strongly advantaged the employee and weakened entrepreneurship. As of today, several laws still make it hard for entrepreneurs to start a business.
The employment rate is around 9% after a significant decrease during the last decade. By law, the employees can not work more than 35 hours a week (the law will be changed soon). However, foreign investors appreciate the skills of French workers, the advanced level of research, the mastery of high technology, the stable currency and control of production costs.
The heavy legislation is a huge brake for the entrepreneurship in France. Also, taxation is France is very constringent for the entrepreneurs. There are 2 different taxes in French taxation: the employer tax and the employee tax. For every euro paid to the employee, the employer must pay almost a euro as employer tax. Then, the employee will have to pay about 25 cents as employee tax for every euro received.
However, France’s economy stays attractive for entrepreneurs. France is the world’s sixth largest economic power in terms of GDP. The country’s assets are varied and include its transport and telecommunication sectors, its agrifood and pharmaceutical industries, along with banking, insurance, tourism and the traditional luxury products (leather goods, ready-to-wear fashion, perfumes, fine wines and spirits, etc.).
France ranked as Europe’s third-largest venture-capital and private- equity market in 2001, after the UK and Germany, according to a report prepared by the international accounting firm PricewaterhouseCoopers and the UK private-equity investor 3i. France was third in terms of total investment (US$3bn) and the amount of technology investment in 2001 (US$1.1bn) and second (ahead of Germany, but still behind the UK in terms of buyout investment (US$1.7bn) and funds raised (US$4.9bn). The market was much less buoyant
than the previous year when US$5.2bn was invested and US$7.5bn was raised. France accounted for 18.14% of investment in Western Europe in 2001, 14.4% of funds raised, 13.25% of technology investment and 17.53% of buyout investment.
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