1. The stimulus packages have been unprecedented, particularly in France. This unconditional support from the government seems limitless in its efforts to prop up the economy. Which sectors are most affected, and are these interventions sustainable?
Many sectors are affected by the stimulus plans announced this year, given the cross-cutting nature of the crisis. While this crisis may seem exceptional, history shows that certain sectors frequently benefit from this financial support, such as construction and automotive. The plans are always intended to be « unique, » but it is clear that over the decades they have become « structurally periodic »! For example, « scrappage incentives » have become the norm every decade, being deployed in 1993, 2009, and 2020.
It therefore seems sensible to ask the players themselves to take charge of self-financing future « structurally periodic » recovery plans relating to their sector of activity. Hence the creation of countercyclical professional sectoral stability funds.
2. How can these funds be set up and with which stakeholders?
Each professional fund would be managed by an independent association run entirely by professionals from the sector concerned, with the government overseeing commitments. The public authorities would be responsible for ensuring that the fund is adequately endowed during periods of strong economic activity and that reserves are only used in times of crisis. The professional federations in each sector would obviously be fully involved in setting up these initiatives.
Each fund would collect contributions from all companies (French or foreign, subcontractors or main contractors) in its sector at the peak of the economic cycle. In the event of a crisis, the accumulated reserves of the fund, owned by the sector, would be released in order to massively boost activity.
3. How much would these contributions be and how would they be determined?
The contribution periods for each fund would be determined according to activity thresholds, defined at the time of their establishment and monitored by an independent and objective institution, such as INSEE. More specifically, during periods of economic growth, professionals in the sector could mobilize part of the surplus added value to feed these funds.
For example, the automotive sector could contribute when annual sales exceed the average sales observed over the last five years. The contribution could be set at €1,500 per vehicle exceeding this average. Over the 2016-2019 period, such a collection would have represented an average contribution of €140 per vehicle sold, or 0.5% of turnover. By the end of 2019, the automotive industry fund would thus have been able to finance nearly 400,000 « scrappage premiums. » This is twice as much as what was released by the government and financed by taxpayers.
4. Could these professional funds be set up quickly?
As we are currently in a period of crisis, the next calls for contributions are not expected to take place for several years. Therefore, in order to ensure that these funds are structured as effectively as possible, the terms and conditions for their implementation in each sector of activity could be the subject of in-depth discussions with the professionals concerned, without compromising the main principles outlined above. The operational implementation of these funds should therefore take place by early 2022 at the latest, helping us to be as well prepared as possible for future crises.
