A thermometer for businesses
In October 2022, the professional union representing consulting companies in France, Syntec Conseil, published with the BVA institute, the 11th edition of their annual barometer dedicated tothe competitiveness of private companiesin France.
This survey was conducted among 500 executive team members of French companies of all sizes and sectors.
Renamed #ACCELERATE, this barometer is a thermometer allowing us tomeasure the difficulties encounteredby companies and theirshort-term vision of the future.
It is also a good tool for understanding what the world of private enterprise is like in France through the voice of their leaders.
Private enterprise in France
France has 4.1 million private companies representing 67% of GDP and 77% of salaried employment.
Among the 4.1 million private companies, there are
- 270 Large enterprises
- 5,800 medium-sized companies
- 145,000 small and medium-sized enterprises
- 3.9 million micro-enterprises
Find their definition on the INSEE website:https://www.insee.fr/fr/metado...
Although micro-enterprises represent more than 95% of private companies in France, they contribute 20% of added value and 17% of employment.
The other categories fairly equally share the added value and salaried employment.
The survey reveals the service sector as the leading contributor to national wealth ahead of industry, commerce, followed by construction and agriculture.
What are the short-term prospects?
One in four companies (38%) anticipate a deterioration in their activity by the end of 2022. This forecast varies across sectors. It was particularly strong for the Industry sector (1 actor out of 2) and Commerce. The Construction sector seemed the least worried, with nearly one in two Construction companies considering the situation stable.
The main reasons stated are theevolution of energy costs, raw material costs, and recruitment difficulties. These reasons are considered very important in the activity of at least 4 out of 10 companies.
Recruitment difficulties are the number one issue for service companies, along with the increase in salaries linked to inflation.
Companies face four significant internal challenges. The first challenge concerns retaining talent within their structure. This is followed by work organization, energy transition, and financial management of the company. The latter is the main concern of small and medium-sized enterprises. In contrast, large companies and intermediate-sized companies are primarily concerned with their capacity for innovation and energy transition.
The concern of companies in the face of a troubled economic environment
After 2020 and the health crisis, GDP had returned to its pre-crisis quarterly level by the third quarter of 2021. More than half of the leaders (61%) were confident and optimistic about their company's economic outlook over the next 5 years.
However, the year 2022 was marked by a multitude of threats, including tensions in the raw material market, inflation, the labor market, energy costs, supply chains...
Intensifying the transformations initiated?
To gain competitiveness, companies committed in 2022 todeveloping digitalization, modernizing production tools, or integrating Environmental, Social, and Governance (ESG) criteria.
The unstable talent context is a challenge that companies are addressing by undertaking these transformations.
The ESG transition has become an essential imperative for companies:40% of environmental, social, and governance criteria weigh on a company's overall reputation.The French rank third behind Finns and Swedes in terms of CSR performance.
Regarding digital transformation, it is demonstrated that 26% of companies that have reached digital maturity were more profitable than their competitors. This is a major issue for companies; the pandemic revealed the competitive advantage of digitalized companies.
Companies must adapt their work methods in response to 86% of employees who wish to continue teleworking following the health crisis. It should be noted that todayyoung professionals will change employers 13 to 15 times during their careers.
Industrial companies have every interest in moving towards implementing Industry 4.0; automating, robotizing, and using artificial intelligence is crucial for their competitiveness. Companies that already adopt this approach increase their productivity by 15-20%.
Opportunities for French companies
Following the increase in raw material prices, such as gas, the tariff shield enabled France to keep inflation at a lower level compared to our European neighbors.
The health crisis accelerated the reconfiguration of supply chains, which, in the coming years, will be marked by regional platform redesigns and will be relocated nationally. This choice will take into account factors related to security, energy costs, and ESG criteria. These changes will bring opportunities for France.
ESG criteria are playing an increasing role in the attractiveness and competitiveness of territories, companies, products, or services. France has a unique opportunity to create an advantage and compensate for some of its weaknesses regarding cost and non-cost competitiveness.
The leaders' view on French competitiveness
Overall, the evolution of competitiveness in 2022 was mixed among our French leaders between deterioration and improvement. It was more significantly degraded in the industry and commerce sectors. The main obstacles encountered are the availability and qualification of the workforce, labor costs, and corporate taxation. In addition, for the industry, regulatory constraints from public authorities.
The survey reveals surprising responses from leaders regarding ESG criteria, considering France to be lagging on these key issues, although according to the global ranking and our analysis reported above in terms of CSR, the country has a good position with its 3rd place.
Better maintenance, modernization, and expansion of the French nuclear fleet are viewed positively by business leaders, who are almost unanimous (88%) on the importance of a strong nuclear program for the country's competitiveness.
Several significant obstaclesto overcome are perceived by leaders: the availability and qualification of the workforce, labor costs, fiscal pressure, and the complexity of French administration. These weigh heavily on their competitiveness.
The quinquennial reforms, a positive impact?
During the government's speech in July 2022, economic priorities were announced and approved by a large majority of leaders. They concern the continuation of tax cuts, the pursuit of full employment, an emphasis on work, and pension reform.
However, contrary to this approval, leaders estimate that 65% of themfind the pace of reformsimplemented since the beginning of the quinquennium too slow. Only those implemented during the previous five-year term have had a positive impact on France's attractiveness.
The keys to moving forward
To improve the competitiveness of companies in the coming years, leaders would like certain reforms to be implemented as a priority, such as reducing taxation, reducing social charges, followed by pension reform and simplifying administrative procedures.
During the survey conducted at the end of 2022, leaders' votes remained unanimous compared to 2021 on the need for a real reform of public spending during the new five-year term.
The majority of leaders say they are confident about the implementation of reforms to improve the competitiveness of companies in the country, but only 76% of small business leaders are pessimistic and not confident. This lack of confidence is explained by the number of obstacles on the path of reforms considered important by business leaders.
Boosting competitiveness through these 3 engines:
- Make the country a champion of responsible growth
- Continue the re-industrialization of the country
- Invest in innovation
To do this, it is necessary to remove the obstacles to company competitiveness:
- Taxation and labor costs
- Availability and quality of the workforce
- Administrative and legal procedures
> Download the annual 2022 barometer PDF
