If the economy doesn't work, you forget about art, culture, the state, justice, the police. There's no money, there's no money. It's fundamental that politicians understand that our margins must be high. That's the big problem in France. Work isn't going to be enough. So we have to stop saying it's not for the French, we have to stop thinking that we're like this and that we're biologically made like this. No, I do 90% of my 500 million euros in turnover abroad, and I have half my workforce in France, and I have great guys, and I have 10 people, and it's like I often say, it's more complicated to manage a small business of 10 people than 5,000 people at Radiall. I would recommend to every entrepreneur: watch your cash, because it's your cash that will determine whether you die or grow.
Former president of MEDEF and Business Europe, founding president of the 'Believe and Act' association, president of the Institute of Solutions. He has been at the head of Radiall for over 34 years, an industrial family business that has become a group with 500 million euros in turnover, 88% of which is international. He claims today that underemployment costs France nearly 100 billion euros. His reasoning is simple: when compared to the entire population, the French work about 100 hours less per year than the European average. But behind this calculation, there is a much more strategic question: how do we get more young people and seniors back to work without simply asking those who already work to do more? A topic more than ever relevant with upcoming deadlines and the growing opposition between bosses and employees. Today, I welcome Pierre Gattaz. Hello Pierre.
So Pierre, let's get right to it. We talked about 100 billion, we talked about France. Is it possible to find a solution to work in France?
Of course it's possible. We were a great country, we are still a great country. Today, we are going through a crisis, I would say for a few years now, which is a bit painful. The economy is declining, the unemployment rate is increasing, but there are plenty of solutions. That's why, by the way, I created a think tank called the Institute of Solutions. So, you were talking about 666 hours per year per inhabitant compared to 770, the European average. If we take the entire French population, we actually work 100 hours less. 100 hours less times 60 million people, that's 7 billion hours less per year in France. Times 15 euros. Yes, yes, we are at 100 billion. 100 billion, which also generates 80 billion in various and varied employee and employer charges for the country. So the lost revenue is 180 billion. Exactly. It's enormous. So where do we find that? What is the problem? It's that our young people don't work enough. They have a low employment rate. The youth unemployment rate is 20%. The average for Germans and Swiss is around 5-6%. Why don't our young people find work easily? Because we push them all towards the baccalaureate. I am completely against the idea of sending everyone to the baccalaureate. We have abandoned vocational training and apprenticeships, which are fields of excellence in Germany and Switzerland. And at 17, I can give you a figure I like to cite: 70% of 17-year-olds in Switzerland are in apprenticeships. 70%. In France, it's 5%. So in Switzerland, these vocational apprenticeship paths are fields of excellence. And that means 30% go to the baccalaureate. And what do they do at 17? Well, they can change paths, but they enter the company, and that's very interesting. They learn the qualities of the company, the human community of the company, the values of the company, the hierarchy, the discipline, etc. And these people learn their trade, but they can move up. They can be technicians, then engineers, then directors, then presidents. So if you will, these are paths of excellence, and you learn through the field, through the company. I think we need to take inspiration from Switzerland and Germany. We send our kids to the baccalaureate and then to university for psychology, philosophy... there are no job prospects, and we end up with 20% of our kids unemployed.
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Of course, of course. So, the problem is that, and it has stopped, so I think youth unemployment will rise, it's terrible. And secondly, we need to re-industrialize France. We've fallen from 20% of GDP to 10% of GDP. If we relaunch industry to 15% of GDP, which is one of my objectives for 2040, around what? The military, defense, everything related to security, everything related to health, everything related to agri-food and food, everything related to nuclear, clean energy, living things... all these are key technologies. You have almost ten strategic sectors of sovereignty where the French are strong, are good, and are just waiting to flourish to reinvest in France, innovate, and export. So it's possible, all of this is possible. Afterward, there's just one thing to do: we need a business-friendly environment. That means politicians must understand that if the economy doesn't work, you forget about art, culture, the state, justice, the police. There's no money, there's no money. And the money, who generates it? It's the economy. And the economy, who is it? It's the company. So, the debates since the dissolution have been terrible. We mistreat the company, we despise it, we despise success, we want to tax everything that moves. But that is unbearable for us and for me in particular. I think it's exactly the opposite. We need competitive taxation.
I share your view because you see, I think that concretely, as an entrepreneur on a daily basis, what do we do? We take risks that we're not asked to take. We create jobs, real jobs in real cities with real families, and we move forward, we decide quickly and we correct quickly. And when the company is doing well, it's not just the boss who's doing well. It's the whole environment. It's not just the founder who wins, and I think that between bosses and politicians, we would gain if it were more often around a table, perhaps listening to each other and saying that we have an interest in both functioning well.
Yes, there are two dramas in France: the economy, microeconomics, the company is very poorly taught in France. Very, very poorly. We should teach it from middle school, from high school, etc. Because it's bad to make money. Well, it's bad, and I would say it's very bad to think like that, by the way, because if you want, you have to explain that the company is the most beautiful human community after the family. It's an extraordinary institution. Why? Because it generates well-being for people. We provide work, employment, dignity, fulfillment. We train people, we integrate people, including minorities. Secondly, we provide solutions for the climate. People tell me, 'But no, you pollute, etc.' Not at all. In all our companies, we are very careful. We provide research and innovation solutions to improve living things. We have the solutions. Thirdly, we bring prosperity to the country. Prosperity to the country because we create wealth. We create our own wealth, we depend on no one. And on top of that, we share it through taxes and charges, which politicians don't do, or the public sphere does less. Well, apart from the state functions. When we pay a salary, it has all the charges, and so we finance... so it's a golden goose. And the fourth mission of a company is to invent the future. We invent the future. Me, Radiall, electronic components, I invent the future, I go into quantum computers, I participate in reducing CO2 in planes because I replace copper with fiber optics with small optoelectronic components. So you see, it's a mission, it's about humanity. I summarized it in 5 Ps: People, Planet, Prosperity, and Progress. People, living things, the country's prosperity, and the future. But the 5th P is Profit. If we are not profitable. And that's what needs to be explained to the French and to politicians, but you forget all that. And I've been through four crises at Radiall in 34 years. In crises, like all companies, the horizon narrows. We're a bit in survival mode, we don't know how long it will last. We protect the cash, we increase salaries much less, there are fewer bonuses. There are fewer dividends for shareholders, suppliers, subcontractors, we squeeze them a bit to lower prices. So the horizon narrows. A crisis shouldn't last too long. And when you are in growth, well, over 34 years, I've had a few years of crisis and quite a few years of growth. Well, you generate margins, profits that allow you to motivate your teams, motivate your suppliers, and take care of living things, ecology, etc., because you want to, you can invest. So it's fundamental that politicians understand that our margins must be high. What's paradoxical is that, as a leader is asked to have a 10, 20, or 30-year vision for their company, my question is: what will France be in 2030, that's too soon, in 2050? Will we be a tourism territory, an industrial territory, what will we be? And what we need as leaders is to have a framework. Exactly. And in that, we will play, we will have fun. So, I'm going to do a little advertising for my think tank called the Institute of Solutions, which I created a few months ago with a few entrepreneur friends who want to shake things up. That's what it's about.
I want to shake things up, and I want, above all, the first thing we did is a 2040 vision for the country. In 2040, that's in 14 years, what do we want to be? Well, we started with people. We want the social elevator to work again. We want full employment, meaning we have 4% unemployment. We want youth unemployment to be around 6-7%, not 20% like today. We want the minimum wage to be increased by 50%. In 15 years, it's possible. Know that the Swiss are at 3,800 euros net in Geneva for the minimum wage. We are at 1,450. There is room for maneuver. And industry must rise back to 15% of GDP. We must have regained growth of around 2% on average. Today, we are below 1%. And so if all this means that the public sphere has grown, grown, grown, grown, which has asphyxiated the private sphere with taxes, etc. We have a social model that has become, that is very generous, too generous, too generous, and which is no longer financed since we finance it with debt and deficit. That's not popular. No, but yes, because you say it's like a company, well, you're going to beef up the administration. I'm not saying we need to make it leaner, I'm saying beef it up. What does that mean? You beef up the state functions, healthcare workers, teachers, justice, police, etc. But on the other hand, you optimize everything else. All the administration of the administration, well, that needs to be reduced. In the territories, you have six layers, two are too many. So there's a problem. So you see, that's what we're looking at. And that's what we ask of the entrepreneur: when the company is not doing well or there's a crisis, we tell them, well, make cuts and start optimizing.
Yes, but when there are crises, I've been through four quite hard ones, the 2001 one which was the telecom bubble that burst, I lost 2 x 25% of my turnover. So it was very, very hard and very long. Well, what do we do? We make savings. So we make structural savings and then we motivate the salespeople to go find growth anyway to tell them, and the engineers too, to get back on track if you will. And in France, if you will, we are in crisis and unfortunately we haven't made any savings at all. But for 40 years on the public sphere, we have hired in 14 or 15 years 700,000 civil servants in the territories. So we've gone from... but it's enormous. And with these five layers I talked about, like the community of communes, the agglomeration, the department, the region, the nation, the Swiss have three layers. They have the commune, the canton, the... Why have we hired so many? But if you will, there's a... I think the problem with our politicians is that they've never managed a company, and I think we should almost make it mandatory for two-year internships for everyone who wants to do politics one day. I would start with the grandes écoles, ENA, Sciences Po, Polytechnique, where they should be an assistant to a PME boss for 2 years and they put a little money in the capital, you see, like 10,000, 20,000 euros. And they try to make the company and their capital grow, because if they can lose the thing, they might even go into debt. And there, two years next to a boss who is going to fight all day to be competitive, to find markets, to reduce costs, to face Chinese competition. That's the real life of an entrepreneur. What you were saying earlier, we take risks all day, we create our own wealth, so we ask nothing of anyone. But just give us a business-friendly environment, in English, meaning conducive to business, guys. And understand that we take risks all day with our own money. So we ask for nothing, and above all, we don't want your subsidies, your aid, your aid. Keep your subsidies, your aid, Mr. State, and lower taxes by that much. So all this, you see, I think politicians unfortunately have never been confronted with this life, which is both wonderful for an entrepreneur, but full of nightmares. I've had nightmares in my life because I had cash flow that was dropping, orders that were falling apart. It's not good. You say, 'Damn, where am I going now?' They haven't lived that. They haven't lived that. And when they talk to you about a 2% wealth tax all day, etc., it becomes unbearable. So that's why I created the Institute of Solutions, to resist and fight with my peers to say, 'We're not going to let them do this, guys, we're not going to let them do this.'
It's a bit like the 'pigeons' movement a while ago, but I think that's exactly it. And we realize, if you will, that the business movement, the bosses are very discreet, they are secretive, they are in their companies, but they already have a lot to do in their company and motivate their people, their staff, the customers, etc. There's a lot of work, and if you want to do politics, it's complicated. But in the case of this think tank, there are others that have been created, by the way. Well, we hunt in a pack and we carry voices that are sometimes too discreet and secretive, and we are spokespeople, and that's what we want to do in the coming months.
Impeccable. I can only go in that direction. We were talking earlier off the record about some statistics. It's true that when you look in France, well, we talk about very large companies, but 95% of companies in France are SMEs. When you also look at salaries, there's a recent study that came out on the salaries of entrepreneurs, of leaders, well, we see that the median, average salary is 2,600 euros net, and that 25% of them earn the minimum wage. It's true that sometimes you can ask yourself the question, 'Why am I going to create value if I only get that?' Because somewhere, I'm putting my health, my finances, my life on the line. How do we help them in the end? Well, first, recognize them as the real heroes of the nation. I insist, the bosses of small and medium-sized businesses, artisans, shopkeepers, these are tough people, these are wonderful people. These are people who devote themselves, who work 12 or 15 hours a day, often on weekends, etc. So, we don't realize it. And to earn, indeed, the average, I think it's 4,000 or 4,500 euros, the average remuneration of a boss, that's 99% of bosses. You have the CAC 40, and we are lucky to have the CAC 40. These are large companies that are managed, that make ecosystems work, that create jobs in France, that create taxes. So it's a chance to have the CAC 40, but on the other hand, it's another world. You then have the family-owned mid-cap companies. We are 6,000, of which Radiall is part, with 4,000 people. These are family businesses with one or two or three successions, and these are tough or struggling too. They want to last. So they are often located in industrial territories. They make territories live, they must be protected, they must not be bothered with succession in particular. And then you have the pack of all the shopkeepers, artisans, small and medium-sized businesses, and those, we must recognize them, and I think the French recognize them, since in recent polls I've seen, around 80% of French people say we must listen to the bosses, and very often of SMEs, small businesses, mid-caps, etc. They are very respectable, like the mayors, by the way. And then you go down. So the boss in general is around 55% favorable opinions, which is enormous. Unions are at 35, media at 35, and politicians at 15%. So the company is very, very valued, around 75-80%, the boss around 55%, which is very good. So I think the image has improved a lot, and during Covid, we were very virtuous, the bosses, because indeed we protected the teams. I put masks everywhere, tests everywhere, etc., and my employees were telling me, 'We prefer to come to work than to go do our shopping.' People want to work and want, above all, for work to be paid. That's the big problem in France. Work doesn't pay enough.
My other fights. I received Antoine Fouchet, former chief of staff to the Minister of Labor, who came to share some statistics indeed, and who explained that what stood out was that it was better to have well-being than to work well, since today the path, well, in any case, work didn't allow you to improve your standard of living. Why did it happen like that?
It's 30... I share Antoine Fouchet's observation that work doesn't pay enough, but he wants to transfer charges, taxes onto retirees, etc. I am against it, we must stop the tax gravy train. There is a tax problem in France that is enormous. We have a public sphere that is 57% of GDP. European average 49. We have 8 points more of GDP. 3 times 8 is 24, that's 240 billion too much. So we must stop thinking we're going to lighten taxes to massacre others. I am against it. So we must reduce the public sphere on the administration of the administration. We protect the real state functions. You reduce the territory by at least two layers and you remove half of the agencies. There are 1,000 state agencies in France. And these people, we find them in the private sector thanks to the value that is created, for example... well, we need to transform them, put them in the private sector, privatize them, reduce the workforce. How do we do it? Well, you don't replace a civil servant on retirement in this administration, not judges, police, etc., but there are solutions. You put in AI. If I were President of the Republic, first, I wouldn't sleep because the debt is increasing by 5,000 euros per second. I wouldn't sleep, neither at Matignon nor at the Élysée. I don't know how they sleep, but we are heading for the wall at a colossal speed, at a speed of 5,000 euros per second. So if you will, I don't understand that nothing is happening. So we're waiting for May 2027, I was told, but guys, that's 9 more months. So if you will, and there we must listen again to the French and the bosses, the bosses who create wealth. So guys, lower our taxes, give us competitive taxation, public spending, make savings there. There are plenty of ideas, I have plenty. And then we can do it with the civil servants. In our companies, when we are in crisis or not, all the decisions, we chew them over with our employees. I've done a lot of participatory management, total quality. We involve the employees. So to reform the civil service, you have to do it with the civil servants, you have to motivate them with bonuses, with... you see, simply by asking how to build a project together for this country. But exactly, 2040 vision, where do we want to go, guys? Well, we're going to get there together.
There, there was a study that was supposed to come out. There was a study that was done on 2030. I don't know if it was published, it was supposed to be in June normally. In any case, I haven't heard about it in the press, but there were snippets of it, but it's not far enough.
Yes, well, 2030 is tomorrow, and we need to go to 2035, 2040, because 2040 at least gives a bit of breathing room. Afterward, you shouldn't go too far because otherwise the French will say it's not for me. But I think this vision in our companies, if you will, what do we do? Well, we bring our employees into a 5-year, 10-year, 15-year strategic plan. There. And you take them with arguments and indeed you try to convince the people to be with you and accept reforms. I wrote a book called 'Winning More is Now' with three bosses, Michel Deos, Xavier Fontané, Maxime Mayache a few months ago. We listed 30 economic reforms to make, and we said if we put them like that, everyone will say it's Gattaz again, ultraliberalism, etc., the bosses wanting to lower charges. No, not at all. Each of the reforms, we linked them to an increase in net salary. We found 450 billion in savings, it's enormous, 15% of GDP, which will allow us to do three things: increase the minimum wage by 30% in 10 years, reduce the deficit almost to zero, well, less than 3% in any case, and invest in the future: military, AI...
Quantum, climate, and so on. That requires investments. And you see these three-thirds, well, if we explain that, that's what we're going to try to do with the French, telling them we're not asking for sacrifices, we're not asking you to work more without earning anything, like those two days, I don't remember which prime minister, that you had to work two days without being paid. No, not even in a dream. Work must pay. Work must pay much more today, and it is compressed by the taxation of public spending, which I've talked about, and by a social model that is too generous in employer and employee contributions, which compresses net wages downwards and increases the cost of labor. And there you have what? Retirement. Unfortunately, this generosity finances a retirement where you leave at 62, 63 in France. All our neighbors are at 67 today. So there, and we need to re-enchant work, it must pay. So we also propose that each year, from 64 to 67, it is better remunerated for people. 10% more net salary and it costs companies less, 10% less labor cost. Which allows us to say to employees, 'Look, I'm going to work a bit more, it's nice, and I'm going to be re-energized, and I'm going to be used to train young people,' because today, it's true that for companies, since it costs a lot, well, and because there's the horizon of retirement, people don't use them, and the bosses dream of making them leave because it costs a lot. In Germany, the United States, the Netherlands, they capped contributions for the older employees. Capped. So, I'd like to have your opinion on that, and then we'll talk about Radial, but not only, because we are talking about Radial, but you also got into entrepreneurship with a company of 10, 12 people, or what, 10 people. So we'll talk about that. What do you think of the system where, indeed, on the first salary levels, you have very few contributions, but as soon as you hire executives or increase salaries, the contributions increase enormously. It's counterproductive or not?
So if you want, I'm unfortunately a bit responsible for this issue because the CICE, which is the tax credit for competitiveness and employment, which allowed lowering contributions, and I wanted a reduction in contributions on all salaries, obviously. And in fact, well, it cost a bit, but because savings had to be made on the other side, and unfortunately, they never made any savings on the other side. That's the problem we have, that the equation is always an equation, so if you transfer things to something else, it doesn't work. French taxation must no longer be a shell game. So they decided to focus it on low salaries, below 1.5 SMIC, I believe, where there is a real reduction. Well, that helped restart the hiring machine, especially for low salaries. Yes, it reduces the unemployment rate, but on the other hand, it doesn't make you want to... The drawback of this system is that indeed, as soon as you go above the SMIC and want to get to 1.5 SMIC or elsewhere, the 100 euros of net salary more that we give to the employee will cost 400 euros more in contributions because there is a threshold effect. That's right. So rather than saying we're going to put contributions back on the SMIC and reduce the CICE, we must think about lowering all contributions. And there, we need to make savings, and to make savings, we need to review our social model: retirement, insurance, unemployment, family, and all social security. And there are many countries in the world that have done exceptional things or from which we can draw inspiration. So Switzerland invented a level of social security with a three-tier retirement. A mandatory level, basic living expenses, well, you're paid; a voluntary level based on your means; and a totally optional level. If you want cash, well, you take the risk of... I'm in great shape, and so on. So, and there you go. And we need to give freedom. We are very freedom-restricting in France. We constrain everyone, we want to fit everyone into a test tube, and we add 80 codes and 400,000 standards on top of that, you see. So it's totally freedom-restricting, it's the opposite of our three republican values.
Well, how could we simplify? A big project for the ideas, which said, 'Mr. Gattaz, we would like to create a labor code from scratch.' From scratch, I have 20 chapter headings, and I would like the employers' federation to be with me. I said, 'Of course, we will work together.' He had recreated, he wanted to recreate a labor code of 400 pages instead of 4,000, but it checks all the boxes. Well, and he was unfortunately torn apart by the unions of the time and by, I think, quite a few unions who unfortunately didn't want that. And so I found that absolutely regrettable, and I thought the idea was brilliant. If we want to simplify our 80 codes and 400,000 standards, I think one of the solutions is to recreate from scratch each of the most important codes, or rather the most annoying for bosses and French citizens: probably urban planning, the environment, the labor code, and so on. And it would allow us to say, we start again with the 20 chapter headings that work, and with an obligation of results, not of means, because the problem with France is that you describe everything in detail, everything is done like the disability laws, for example, on urban planning. It's very virtuous. Of course, we will all be disabled one day. But the Americans, the English, they say you must have 10% or 15% of your rooms for disabled people, and you manage, and they won't describe to you the entire door frame and so on. They sometimes have boys 24/7 who carry the... so in fact, it's the difference between common law, which is very Anglo-Saxon, which points to a result, saying you manage, we won't hassle you on the means, but you must do this. A disabled person must come to your hotel, if you don't do it, you are outside the law. And us in France, it's another way of proceeding where we detail everything, we go into all the details, and there it creates terrible things because you are going to evaluate all scenarios, so you have 4,000 pages in the code, and you are inevitably outside the laws because 4,000 pages, it's impossible to understand them and to... you see.
