Friday 24 November 2017

'Uberisation' and a more dynamic economy could be good for France - despite the protests

French driving instructors brought Paris to a standstill as they joined protests against Uber. REUTERS/Benoit Tessier
French driving instructors brought Paris to a standstill as they joined protests against Uber. REUTERS/Benoit Tessier

The traffic jams were worse than normal in Paris on Tuesday morning, and Uber Technologies was to blame.

No, it wasn't because too many of its black sedans were on the road, nor even that French taxi drivers were protesting again about the American interloper. Rather, it was a result of the fear the ride-hailing app casts over surprising parts of the French economy.

This time, it was driving school owners who were blocking traffic around five French cities. They were protesting against changes that make it easier for drivers to sign up for tests directly via the internet, instead of relying on schools to do it.

Sounds good, right? At least for French people who have to pay about €800 for lessons at official schools, and then wait months for a test appointment that only the school can secure.

But the schools see it as an unacceptable challenge, since it helps new online competitors who charge less and aren't licensed the same way. In a radio interview, the head of the driving instructor union said the changes ushered in the 'Uberisation' of another sector of French business.

Which brings me to my point. 'Uberisation' has become a catch-all phrase in France, trotted out by trade unions, CEOs and politicians to describe threats from tech-driven rivals. Publicis CEO Maurice Levy, who claims proudly to have coined the term (at least in France), uses it to pitch his services to big companies. Hey supermarket chain Carrefour or hotel group Accor, we'll help you avoid being Uberised, the pitch goes.

To me, such use of the term is wrong-headed, and symbolises the fear of change that makes swathes of the French economy sclerotic.

Yes, Uber upended the taxi business by side-stepping labour and licensing regulations, and that's problematic. But it also brought a better service to consumers. 'Uberisation' can be a good thing: it can help cut prices, open up protected niches and create jobs.

With just a few days to go before a too-close-to-call presidential election, French CEOs and politicians need to remember both sides of the argument. Unemployment has been stuck around 10pc for four years and is double that for those under 24, while economic growth has been feeble. Against this backdrop, more Uberisation in the world's sixth-biggest economy might not be a bad thing.

Many sectors in France could benefit. Some examples: the state-licensed notaries required on every property transaction; retail outlets whose hours and sales activities are state- regulated; and pharmacies, which have a nonsensical lock on over-the-counter drugs and products like contact lens solution.

France has introduced some reforms, including relaxing rules on Sunday shopping. But there's much more to be done. France has been stuck around 21st in the World Economic Forum's Global Competitiveness Index for a while, despite its educated workforce and good infrastructure. Goods and labour markets are inefficient. Hiring and firing workers is still too difficult.

Liberalising an economy hurts some people, and the government will probably have to intervene to ease the transition. Taxi drivers who paid a lot for state-issued licences deserve help when Uber upends the rules.

Uber's labour practices certainly deserve the scorn they attract. But you can't ignore the changes brought about by the internet, nor the penalties from over-regulation - even in France.

A more dynamic economy could offer more opportunity, even to those hurt by change. While it might be heresy to say it on the campaign trail, bring on the Uberisation a la Francaise. (Bloomberg View)

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