Work hardly pays anymore.
Purchasing power in France should increase by 1% this year, or 380 euros, anticipates the French Observatory of Economic Conditions (OFCE), mainly due to the revaluation of pensions and income from assets.
But those for work would fall by 40 euros despite a 0.8% increase in real wages, due to a contraction in employment and a drop in the income of the self-employed.
This purchasing power is calculated on average, per consumption unit (CU), a measure which takes into account the composition of households.
It would be supported by the increase in income from assets (real estate, interest on savings, etc.) to the tune of 190 euros.
It would also be supported by social benefits (+250 euros), thanks to indexations at the start of the year, including 5.3% for pensions, which according to the OFCE could be higher than the inflation expected for 2024. Deductions would affect the purchasing power of 20 euros.
At the end of 2024, purchasing power would be 2.6 points above its level at the end of 2019.
Covid: social benefits supported purchasing power
The observatory highlights “very different dynamics” between sources of income in recent years, marked by “two specific shocks”, Covid and the energy and inflationary crisis.
During Covid (2019-2021), purchasing power per CU increased by 350 euros per year, thanks to social benefits paid during the pandemic (280 euros).
It increased less (10 euros per year) between 2021 and 2023, a period of inflation, but was supported by a significant increase in wealth income (390 euros), linked in particular to the rise in interest rates.
These “disparities” generate “heterogeneous situations” between households, notes the OFCE, which notes that the consumption basket increased by less than 10.7% for the 10% of households least impacted, but by more than 13, 9% for the 10% of households most exposed to the shock.
These are more common in rural areas, among low-income households and among retirees.
The wealthiest favored between 2021 and 2023
Between 2021 and 2023, households belonging to the lowest 10% - those in the 1st decile - experienced a slight increase in their purchasing power (0.3% per year).
But, their savings rate being negative, we can speak of “less deterioration in their financial situation”, notes the OFCE.
Also read “There is a form of decline”: purchasing power, the new signs of downgrading
Households belonging to deciles 2 to 7, i.e. 60% of households, experienced drops in purchasing power of between -0.3% and -0.8%.
That of decile 8 was stable.
That of households in decile 9, on the other hand, increased by 0.4%, and those in the wealthiest 10% by 1.2%.