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MEDEF Summer University

Published on September 3, 2014
Speech by M. Manuel Valls, Prime Minister

Paris, August 27, 2014

(Check against delivery)

Mr President,

Business leaders,

Ladies and gentlemen,

Thank you for your welcome and this invitation, which you extended a few weeks ago. I accepted that invitation without hesitation, Mr President, for the role of France’s prime minister is to come and meet the lifeblood of the nation, and therefore to come and meet business leaders and entrepreneurs. Indeed, my very first visit as Prime Minister was to a business: the Thalès research centre in Gennevilliers.

I know it’s the normal thing to pit the Left against the business world… It’s an old refrain. Yet I deeply believe, precisely, that our country needs to move beyond posturing and the fixed roles that we are so used to, those fixed roles where everyone moans and thinks they know what others will say, before they even open their mouths.

We have wasted too much time that way, so I will say clearly that we have to stop systematic confrontation: government against business, business leaders against employees and trade unions against employers’ organizations. Rather, let’s seek to cooperate and find paths that serve the general interest. That’s what shouldering one’s responsibilities means. And France’s situation demands it.

As I said, Mr President, I accepted your invitation without the slightest hesitation. But neither you nor I imagined then that this meeting would take place in such a context, just after the first Council of Ministers’ meeting of a new government.

You know the reasons why we chose to form this new team. Last night I had the opportunity to explain them to the French people. The President recalled them this morning.

The choice of this new government is a choice of clarity and coherence in the implementation of the economic guidelines laid down by the President.

The government has set to work to speed up the pace of reforms, to move our country forward. And these reforms will need Parliament’s approval. That was also the case for the Responsibility and Solidarity Pact. And I have worked hard to explain and convince. On the benches of the National Assembly and the Senate, many elected representatives have good knowledge of business and the economic fabric of our regions. That is an opportunity for our country, and I will always support the work of our parliamentarians. They work for France, for the general interest and for the French people who elected them.

My key words as I stand before you today during this moment of discussion are coherence and clarity. This is also a moment of frankness, for I believe we can say things to one another very directly.


I believe and stand by it: France needs you! France needs its businesses, all its businesses (self-employed people, SMEs, start-ups, major groups), because it’s businesses which – by innovating, by risking their shareholders’ capital, by mobilizing their employees, by addressing their customers’ expectations – create value, and generate wealth that must benefit everyone. I love business. The vast majority of our fellow citizens work in it. Many flourish in it. Some – we mustn’t deny it – encounter problems in it, and sometimes suffer. But the French people understand. The institutions that top the opinion polls are SMEs and SMIs, even ahead of the police and the army.

It’s businesses which create employment. How many of you are battling to protect jobs, motivate and reassure people, despite a gloomy economic situation? I’ve been saying this for years within my political family: there are no jobs without employers. That’s why it’s absurd to talk about a “gift to bosses”. A measure beneficial to businesses is a measure beneficial to the whole country. Businesses don’t belong solely to entrepreneurs or their shareholders. They also belong to the managers, to the engineers, to the technicians, to the workers – in short, to all the employees who keep them going.

It’s businesses that produce. Produce is a good word. Businesses also mean innovation: drawing on the research and development of major groups and their subcontractors. The industrial history of our country is packed with the great successes that we all know, in the nuclear, aviation, space, rail, health and automotive sectors, to name but a few. Innovation also thrives in the “young shoots” that are the source of such hope for the future. And we in France have the good fortune to have one of the world’s most dynamic breeding grounds for start-ups. The 34 initiatives of the New Industrial France – driven by some of you – are helping to spur on this dynamism in future sectors, and I know it wouldn’t take much for a great high-technology success to bloom in France.

Create, innovate, produce, invest, reinvest, launch new products… these are all very good words!

Business is also a question of regional organization, cohesion and identity. That really struck me when I visited the Volvic mineral water plant recently and when I went to Le Creusot to see AREVA’s forge. I saw men and women who were proud of their working tools. Le Creusot is a whole town built around its factories. Businesses benefit from the infrastructure built by local and regional authorities and central government, a local workforce educated in our schools and universities, and the economic environment whose structure is the work of elected representatives. Having been a mayor and chair of a communauté d’agglomération [council grouping together several communes], I am well placed to know that the establishment of a business is important for employment but also for the lives of a region’s inhabitants and for its dynamism. And I know how dedicated local elected representatives are, right across France.

Businesses contribute to France’s strength and image in the world.
Our major groups, our cutting-edge companies, our brands (Total, L’Oréal, Carrefour, Accor, Alstom etc.) are known and admired the world over. And French people rightly consider them as part of our heritage.
Yes, France needs its businesses. It must be able to stand alongside you, support you, help you – particularly because global competition is ruthless for you and because new markets are opening up. Other countries – especially the largest ones – don’t hesitate to support their businesses. We’re living in a market economy, in a globalized world… Yes, yes, in a globalized world. Some deny it, but it’s the reality. And so France mustn’t be an exception! Because when businesses win, France wins.


The President has always been convinced of this, because we’ve had a competitiveness problem since the beginning of the 2000s. The facts are there: declining margins, an increasing trade deficit, and a growing gap with Germany, which has managed to carry out the necessary reforms…

As early as November 2012, the Head of State decided to establish the competitiveness and employment tax credit (CICE), which is today fully operational. I remember meeting the boss of an automobile subcontractor – an SME, the SACRED group – in the Eure department. Thanks to that tax credit, that boss had been able to invest in the machine tools essential for the development of the company’s activity.

Then the Responsibility and Solidarity Pact – the 2015 tranche of which, I remind you, the deputies of the majority voted for in July – built on the CICE. And I made a written commitment to your representatives concerning the 2016 and 2017 tranches. I read with interest Henri de Castries’ interview in Le Monde yesterday, stating that his company had not yet received any relief. That is no doubt true, as we decided to ensure that, in 2015, the priority beneficiaries would be SMEs and the 80% of employees earning up to 3.5 times the minimum wage. AXA clearly does not fall into this category.

But in total, taxes affecting businesses have been reduced by more than €40 billion in four years. €40 billion so they can gain competitiveness, so they can invest, set out to regain market share and recruit staff. €40 billion isn’t peanuts! It is equivalent to 2 GDP points, or more than 15 points of additional self-financing. Starting in 2015, many employees will pay the equivalent of 10 points less in social security contributions.

Significant commitments have been made: reducing labour costs, abolishing the C3S [corporate social solidarity contribution] and cutting corporation tax. These commitments will be implemented. They are needed because taxes have risen too much lately. Responsibility for that is shared: €30 billion from the Right, then €30 billion from the Left.

But taxes and social security contributions are not the only things that weigh on our economy. Certain excessive formalities are also expensive and harmful. Both businesses and households are affected.
We are tackling this. A tax inspection charter will soon take effect and an ombudsman will be established. With the Simplification Council, co-chaired by Laurent Grandguillaume and Guillaume Poitrinal, and with Thierry Mandon, who is with me today, we’re going to get Parliament to adopt a bill setting out many simplification measures for businesses. Likewise, another 50 measures are being implemented in the building and construction sector, a vital sector for our economy that must be the focus of a real mobilization plan, which I’ll be announcing the day after tomorrow.

I’d like this simplifying action to be systematic, in every field.
That includes the Labour Code and requires a method about which I will be extremely vigilant: negotiating and seeking an agreement.

Your representatives will participate in the negotiations that are going to begin on employee representation and social dialogue. These negotiations will also consider staffing thresholds. This reform can only be successful if negotiations are too. And the negotiations must succeed, just as the social partners have ensured the success of major reforms over the last two years. In particular, I have job security and vocational training in mind.

And for negotiations to be successful – as all those who negotiate in their businesses know – a balance has to be struck between the commitments of the different parties. Employee protection is generally strong in France. Employees are attached to it, and that is quite right.

But certain adaptations are possible and I am convinced that there is a path to an agreement on these issues that benefits all parties. It is now up to you to do what is needed to find it, with the partners that are prepared to do so. And – you have my word – the government will make all the necessary legislative responses once an agreement is found.

The clarity and coherence I was talking about are particularly valid for fiscal matters. In this field, we need stability and transparency. And the actions carried out – state reform, local authority reform and in particular this “impossible” reform of the regions that we’re currently undertaking, and reform of our health system – illustrate our determination to reduce public spending and therefore reduce deficits and taxes in a credible way. We won’t stray from this course!
I know that in 2012 some of you doubted whether we would ring-fence the R&D tax credit. The President showed his determination, and that determination remains intact, two years on.

This determination applies to fiscal matters, as it does to all the reforms we’re undertaking. Those reforms are expected. They’ll enable us to make our economy more flexible, more responsive. We are going to spur on competition and relax certain rules, such as those on Sunday working and commercial urban planning. The fact is that current law maintains artificially high prices and is a barrier to initiatives. Billions of euros of spending power could be returned to the French people! In other words, we are also boosting demand, which this government has never stopped doing. After all, the economy needs two legs to move forward! And we need to be pragmatic. The government’s policy is therefore to support both supply and demand. I am here to ensure the balance.


Our economic policy also aims to restore France’s attractiveness. It means, of course, promoting the tourism sector, which is essential for our economy and for which the Minister of Foreign Affairs and International Development, Laurent Fabius, is very active. Our country suffers from an “image deficit” abroad, to use a term that is familiar to you. Although we have many assets (such as our infrastructure, public services and health system), our labour law is seen as restrictive, our taxes too much of a burden and our public spending too high. But let’s not forget our strengths either: our well trained and creative workforce.

I also noticed yesterday that Henri de Castries said that, when he developed new activities, he considered London to be more attractive than Paris from a tax standpoint. From the point of view of employees, that judgment can be very different when they discover the cost of housing, health, schooling, energy and transport...

There are also other reasons for our image deficit, and in particular that French penchant for collective denigration. On this subject, I did note what Pierre Gattaz said recently when he recalled that the competitiveness and employment tax credit and the Pact are steps in the right direction. I prefer that to statements systematically stigmatizing our country.

It’s up to us all to promote France, to reiterate its strengths too, not just the difficulties.

It is, moreover, striking that many foreign companies established in France have a positive image of our country. They know how to distinguish between appearances and reality. We should do the same! We need to share and explain our reforms and the economic policy we are implementing.


However, for that economic policy to be effective, Europe’s levers must be brought into play.

Today, the Euro Area is the world region where growth is weakest. In fact, it is practically at zero. Demand in particular has collapsed almost everywhere. France can no longer act alone as it has for the last 30 years, continuing to increase its twofold – trade and budget – deficit.

As Mario Draghi highlighted last week at Jackson Hole, we can have European fiscal policies which are more growth-friendly. The Euro Area needs to give comprehensive support to its internal demand.
Investment has fallen sharply in Europe since the crisis. So the European Commission must commit to public and private investment. The €300 billion over three years announced by Jean-Claude Juncker on 15 July must be clarified.

Secondly, the euro is overvalued. This is bad for a number of your businesses. It’s bad for growth. I said this at the beginning of April, but I’m saying it again. The European Central Bank made a positive move at the beginning of June. Given the weak economic recovery, given the high level of the euro, given the risk of deflation in certain Euro Area countries, the ECB took action to support growth. The euro has depreciated by 6% since April compared to the dollar, with no direct market intervention. But we have to go further, faster, particularly because inflation is too weak. I have every confidence in the ECB in fulfilling its mandate of inflation close to 2% by using every means at its disposal. But time is short!

There must be a reduction of public deficits in Europe and particularly in France, I’m not disputing that. We’ve been living above our means for 40 years. And since 2008, our deficit has been above 4%. As for our level of public spending, it corresponds to 57% of the wealth we produce. Yet the pace of this reduction must be tailored to the current economic situation. It is exceptional, so it has to give rise to exceptional responses. The aim isn’t to dodge our responsibility by asking for the rules to be changed, letting the deficits get out of hand, exempting ourselves from carrying out the necessary reforms, or even pointing the finger at Germany. The aim is to look at things as they are: today, weak inflation, absence of growth, when the crisis has been hitting for six years – those are exceptional circumstances. They must be taken on board. Making new savings to compensate for the effect of excessively low inflation and growth which still falls short would mean creating austerity, applying the brakes for all the countries of the EU. It would, in the end, mean jeopardizing the European project, a project which isn’t only a great market, but also a great venture.


Ladies and gentlemen,

This government is acting for businesses. The nation has agreed to make a significant effort. The French, who are also taxpayers, expect in return that business leaders and their representatives act responsibly. This expectation is legitimate.

Firstly, as you know, there are certain expectations concerning your use of the €40 billion of the competitiveness and employment tax credit and the Pact. Businesses are diverse and not comparable, so there are many possibilities: improving your margins, investing, recruiting, training apprentices who will build your competitiveness in the future, lowering prices, but also paying your employees more. The sum of your decisions will be revealing. And the authorities, like our compatriots, will be particularly mindful. The French people wouldn’t tolerate – and they’d be right – dividends and top salaries skyrocketing.

To implement these commitments, the social partners have decided to launch negotiations branch by branch. That decision was made on 5 March; now it is the end of August. And I must be frank, as you were yourself earlier: too few branches have begun these negotiations, and fewer still have completed them. The Minister of Labour will meet the social partners on 10 September to take stock of the progress made by the 50 main branches. I will myself convene the Pact follow-up committee in October. But I want to be clear: you need to do more, and faster.

The French people have high expectations of us – of us all – regarding our ability to reform. You sometimes criticize the public sphere and the slowness of its reforms… and sometimes you are right. But you also need to lead by example. One well known example is the number of branches that make up our economic and social fabric, the collective agreements: 700. Too many! Everyone agrees on that point. The branches need to be simplified, cut back and regrouped. In that area, you are the ones with the power to act!

Ladies and gentlemen, business leaders,

I often meet you, and I have observed that the most successful businesses are those that have managed to adapt to the globalized economy. Developing internationally is often a decisive step that many of you have made successfully. For others, the local market seems to be a sufficient goal and international development looks like a pipe dream. The government has a role to play here.

We are responding with the merger of Ubifrance and the Invest in France Agency. The ministers also need to act as the travelling salesmen of France and its businesses abroad. I will deliver the same message tomorrow at the closing session of the Ambassadors’ Conference. We must not doubt. We must act. You said so yourself, Mr Chairman. In your own words: France, and therefore its businesses, its trade unions, its employees, must “stop complaining and waiting, move, get a grasp and react”.

That’s the way we expect everyone to be thinking, to put France back on its feet. We must act responsibly, patriotically and with confidence in the future.

For France has assets it can exploit to renew itself, as it has done a thousand times before. It has its demographics and its qualified, proactive and creative workforce. It has its infrastructure, which considerably helps businesses.

So I call on everyone to direct their energies to continuing this work together.

France has so many assets. So many competitive advantages! It’s up to us, up to you to seize them to make our country succeed!./.

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