How much exactly will the more than three million French workers paid the minimum wage earn in 2024? The question is not yet fully settled, but one thing is certain, the probability of a boost from the government to the minimum wage on January 1 seems lower than ever. The expert committee in charge of the subject has indeed spoken out against this option in its annual report, published on Thursday. Although this advice is only advisory, there are few governments that have not followed its recommendations. The only exception was in July 2012. A few months after his election, François Hollande granted a slight increase of +0.6%. On the other hand, Nicolas Sarkozy and Emmanuel Macron have always been satisfied with automatic increases.
In addition to any boosts, the minimum wage is increased every 1 January, taking into account inflation and the gains in purchasing power of workers and employees. In addition, it can be increased during the year if prices have increased by more than 2% since the last increase. However, there have been exceptionally many revaluations over the past two years. Driven by the strong return of inflation, the hourly rate of the minimum wage has changed "seven times from 1 January 2021 to 1 May 2023 with a cumulative increase of +13.5%, including +6.6% year-on-year on 1 January 2023, the largest annual increase since 1991", the experts point out in their report. With all these adjustments, the "smicards" are "the only French employees who have seen their purchasing power maintained", explains Gilbert Cette, an economist and professor at Neoma, to explain the arbitration rendered by the group of experts he chairs.
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17% of employees on the minimum wage
These repeated increases are an advantage that also hides perverse effects. Many employees, who were yesterday slightly above the minimum wage, have been caught up by this floor. As a result, "the percentage of employees directly affected by the increase in the minimum wage on 1 January continues to increase in 2023 to reach a historic level of 17.3%, after 12% in 2021 and 14.5% in 2022," the document points out.
Worse, some professional branches sometimes end up with several minimum levels below the minimum wage. Admittedly, employees do not see their remuneration fall below the legal minimum, but this phenomenon causes a lasting blocking effect at this level. Questioned by the unions, the Prime Minister took up the subject, which led to a social conference on 16 October.
In the aftermath, the executive threatened to crack down on branches that did not play the bargaining game and did not regularly update their salary scales. Sixty of them were in this situation by mid-October. Since then, things have improved, according to the Ministry of Labour, since "only" 39 of them have received a reminder by letter sent a few days ago by the minister. A dozen of them, the most recalcitrant, will even be received by the minister or his entourage in the near future. The aim is to remind them that "the situation is obviously detrimental to employees but also to the attractiveness of the sector and therefore of companies," the ministry said.
Beyond that, the group of experts on the minimum wage calls for a reflection on how to make wage increases less costly for employers. "For a single employee on the minimum wage, raising his net employee by 100 euros costs his boss 483 euros," says Gilbert Cette. This is due to the numerous tax exemptions for low-wage earners that have been voted over time. "Employers' social security contributions at the level of the minimum wage are now limited to the contribution for accidents at work and occupational diseases," the experts write.
On the flip side, this allows the cost of labour on low French wages to be in the OECD average, while "the level of the hourly minimum wage in France remains one of the highest among the countries concerned". On the other hand, "policies to support unskilled employment will have to find other avenues in the future," the authors warn. They add that "large-scale policies to support low-income earners, in particular with the activity bonus, also seem to have reached their limits". These warnings should only strengthen the executive's determination to attack the French social model, in order to finally achieve full employment, promised in 2027 by Emmanuel Macron.