Understanding the Impact of Salary Increases and Inflation on Purchasing Power: A Comparative Analysis for Private Sector Employees in France

2023-10-14 13:39:16

According to INSEE, the median net salary in full-time equivalent was 2,012 euros in 2021. A year and a half later, its level increased in line with the increases granted to employees, without this being enough to preserve their power to purchase.

+6.9%. This is on average the increase in the basic monthly salary in France (gross salaries excluding bonuses and overtime) between the end of 2021 and mid-2023, according to Dares, the statistical service of the Ministry of Labor. A level which remains insufficient to compensate for the increase in prices estimated at more than 9% over the period.

Most employees have noticed this: their purchasing power has eroded in recent months. However, employees on minimum wage were better off, with a cumulative increase in their remuneration of almost 10% in 18 months, the minimum wage being automatically indexed to inflation in France.

Conversely, some low-income workers did not obtain such generous increases, so much so that they saw their remuneration gradually caught up by the minimum wage. A worrying trend which will undoubtedly be on the agenda of the discussions during the social conference which opens this October 16.

To compare your remuneration to that of other private sector employees, enter your net salary in the calculator below, before taxes:

Increase low wages

With the increases granted by employers, the median salary in the private sector should be between 2100 and 2150 euros in 2023 (compared to 2012 euros in 2021). Which means that half of the employees earn more and the other half earn less.

The social conference chaired by Elisabeth Borne this week will focus in particular on the case of low wages who suffer the most from inflation, in particular those just above the minimum wage. The government thus intends to put pressure on the branches which are reluctant to increase their salary scales.

According to a latest report at the end of September, 64 professional branches still had a minimum wage lower than the SMIC. Concretely, this does not mean that employees are paid less than the minimum wage but that they risk remaining at the minimum wage level for many years.

Methodology: To carry out this comparison, we relied on the latest data available from INSEE, namely the distribution of salaries in full-time equivalent in 2021 (excluding apprentices, interns, agricultural employees and employees of private employers). In order to best reflect the increases granted since this date in a context of inflation, we have revalued salaries at the minimum wage level by 9.9%, i.e. the cumulative automatic revaluation of the minimum wage for 18 months.

Furthermore, according to Dares, the basic monthly salary (all gross salaries combined, excluding bonuses and overtime) increased by 6.9% between the end of 2021 and mid-2023. We therefore estimated that employees who earned more than the minimum wage at the end of 2021 (around 85% of all) saw their remuneration increase by 6.4% on average in 18 months (while prices jumped by 9. 1% over the period).

From their 2021 level, all salaries above the minimum wage have therefore been increased by 6.4% in our calculator. This method only aims to obtain a more representative overall picture of the distribution of salaries in 2023. It can in no way reflect the exact situation of each employee. In fact, the salary increase of 6.4% in a year and a half is only an average, which masks significant disparities, some employees having been increased beyond 6.4%, others in this side.

By Paul Louis with Théophile Magoria

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