2024-09-13 12:24:03
The trend continues. In the second quarter, basic salaries have, once again, increased faster than inflation in France, with an average increase of 0.8% over one year at the end of June in constant euros, the Ministry of Labor reported this Friday.
In detail, before deducting the price increase, the basic monthly wage index increased by 2.9% over the same period, and by 0.6% in the second quarter alone, specifies the press release from the ministry’s statistics department (Dares). By sector, the increase over one year reached 3.4% in industry, against 2.8% in construction and in the tertiary sector. The basic hourly wage of workers and employees (SHBOE), which is used with the price increase to calculate the increase in the minimum wage, increased by 0.9% in constant euros over one year, still in the second quarter.
A trend also observed by the Deloitte firm in a study published at the end of August. According to the latter, the average level of these increases is 3.5% for workers, employees, technicians and supervisors (OETAM), compared to 4.6% last year. Executive salaries are increasing almost as much, by 3.4%. Deloitte, which analyzed more than a million individual data from more than 300 companies, notes “a strong recourse to individualization” salary increases in 2024. 100% individual increases now concern a majority of executives (51%, compared to 39% in 2023), and are becoming more common among other employees (34% compared to 25% in 2023).
Increasingly controlled inflation
Table of Contents
Table of Contents
- 1 Increasingly controlled inflation
- 2 Countries still lagging behind
- 3 How are wages in France currently performing compared to inflation rates?
Wages have thus increased faster than inflation for the third consecutive quarter, while the increase in consumer prices slowed to 1.8% in August, falling below 2% for the first time in three years. Indeed, after reaching 2.3% over one year in July, the increase in the consumer price index therefore moderated in August due to a “very clear slowdown in energy prices”according to the National Institute of Statistics and Economic Studies. Over one month, however, inflation stood at 0.5%, marking an acceleration compared to July (+0.2%).
At the end of the Covid-19 crisis, over the eighteen months from the third quarter of 2021 to the first quarter of 2023, employees had, on the contrary, seen their purchasing power eroded by inflation that had risen to 6%, recalls INSEE. A context that had forced the European Central Bank to increase its interest rates, enough to further slow down household purchasing power. Nevertheless, the ECB again lowered its deposit rate by 25 points the day before, which now stands at 3.5%. While the refinancing rate and the marginal lending facility rate stand at 3.65% and 3.90% respectively. This offers a slight breath of fresh air to ease tensions on household mortgage credit and loans to businesses. It had already begun to ease its monetary policy at its previous meeting in June.
Countries still lagging behind
However, even though wages have been able to increase in most OECD countries such as France and even return to their pre-Covid level, some countries are still lagging behind. Thus, in the first quarter of 2024, “annual real wage growth was positive in 29 of the 35 countries for which data are available,” according to an OECD study published in July. But in 16 of them, wages remain below their level in the fourth quarter of 2019, before the Covid pandemic.
In Europe, they decreased in Belgium (-1%), Germany (-2%), Spain (-2.5%) and Italy (-6.9%), among others.
1726739300
#France #salaries #continue #increase #faster #inflation
How are wages in France currently performing compared to inflation rates?
Wages in France Continue to Outpace Inflation: A Trend to Watch
In France, the trend continues, with basic salaries increasing faster than inflation in the second quarter of 2024. According to the Ministry of Labor, the average increase in basic salaries over one year at the end of June stood at 0.8% in constant euros. This marks the third consecutive quarter where wages have outpaced inflation, a resilient trend that is expected to continue.
Sector-Specific Trends
The data reveals varying trends across different sectors. In industry, the annual increase reached a notable 3.4%, while construction and the tertiary sector saw increases of 2.8%. Additionally, the basic hourly wage of workers and employees (SHBOE) increased by 0.9% in constant euros over one year in the second quarter.
Individualization of Salary Increases
A study by Deloitte, published in August, further highlights the trend. According to the firm, the average level of salary increases stands at 3.5% for workers, employees, technicians, and supervisors (OETAM), down from 4.6% last year. Executive salaries are also rising, with an increase of 3.4%. Notably, the study observed a significant increase in individualized salary increases in 2024, with 51% of executives and 34% of other employees receiving individualized raises.
Inflation Under Control
France’s inflation rate has been steadily decreasing, with consumer prices slowing to 1.8% in August, marking the first time it has fallen below 2% in three years. According to the National Institute of Statistics and Economic Studies, this moderation is largely due to a slowdown in energy prices. While inflation still stands at 0.5% over one month, it is a welcome respite from the high inflation rates experienced during the Covid-19 crisis, when employees saw their purchasing power eroded by 6% over 18 months.
European Central Bank’s Monetary Policy
In response to the improving economic conditions, the European Central Bank (ECB) has begun to ease its monetary policy. The ECB lowered its deposit rate by 25 points to 3.5%, and its refinancing rate and marginal lending facility rate stand at 3.65% and 3.90%, respectively. This decision is expected to bring relief to households and businesses, as it eases tensions on mortgage credit and loans.
Global Perspective
While France and many other OECD countries are experiencing wage growth, some countries still lag behind. According to an OECD study, annual real wage growth was positive in 29 out of 35 countries, but in 16 of them, wages remain below their pre-Covid level. This highlights the need for continued economic growth and wage increases to ensure a robust recovery.
the trend of wages outpacing inflation in France is a welcome development, and the increasing individualization of salary increases is a notable trend. As the European Central Bank continues to ease its monetary policy, households and businesses can expect some relief. However, it is essential to recognize that not all countries are experiencing similar growth, and continued efforts are needed to ensure a robust global economic recovery.
Keywords: wages, inflation, France, OECD, European Central Bank, monetary policy, economic growth, salary increases, individualization, purchasing power, consumer prices, interest rates.
What impact does the rise in wages have on consumer purchasing power in France?
Wages Outpace Inflation in France: A Sign of Economic Recovery?
In a promising sign for the French economy, basic salaries have continued to increase faster than inflation, with an average rise of 0.8% in constant euros over the past year, according to the Ministry of Labor. This marks the third consecutive quarter that wages have outpaced inflation, a trend that is expected to continue in 2024.
Salary Increases Across Sectors
The Ministry of Labor reported that the basic monthly wage index grew by 2.9% over the past year, with a 0.6% increase in the second quarter alone. Broken down by sector, industry saw a 3.4% increase, while construction and the tertiary sector both experienced a 2.8% rise. The basic hourly wage of workers and employees (SHBOE) also grew by 0.9% in constant euros over the past year.
Individualized Salary Increases on the Rise
According to a study by Deloitte, the average increase in salaries for workers, employees, technicians, and supervisors (OETAM) is expected to be around 3.5% in 2024, down from 4.6% last year. Executive salaries are also expected to rise by 3.4%. Notably, the study found that individualized salary increases are becoming more common, with 51% of executives and 34% of other employees receiving personalized increases.
Inflation Under Control
Wages have been increasing faster than inflation for the past three quarters, while inflation rates have slowed to 1.8% in August, marking the first time in three years that inflation has fallen below 2%. The National Institute of Statistics and Economic Studies attributed this slowdown to a decline in energy prices. Over the past month, inflation stood at 0.5%, representing an acceleration compared to July.
Historical Context
The recent trend contrasts with the period following the Covid-19 crisis, during which employees saw their purchasing power eroded by inflation that had risen to 6%. The European Central Bank responded by increasing interest rates, further slowing down household purchasing power. However, the ECB has since lowered its deposit rate, offering some relief to households and businesses.
Lagging Behind
While France is experiencing salary growth and controlled inflation, not all countries are experiencing the same trend. Some nations are still struggling to recover from the economic shocks of the pandemic, highlighting the need for coordinated international efforts to address global economic challenges.
Conclusion
The continued growth of salaries in France, outpacing inflation, is a promising sign for the country’s economic recovery. As the European Central Bank continues to ease its monetary policy, households and businesses can expect some relief in the form of lower interest rates. However, the global economy still faces challenges, and international cooperation is necessary to address these issues and ensure a strong and sustainable recovery.
Frequently Asked Questions
- How fast are salaries increasing in France?
Salaries in France are increasing by an average of 0.8% in constant euros over the past year, with a 2.9% increase in the basic monthly wage index.
- What is driving the growth in salaries?
The growth in salaries is driven by a combination of factors, including a strong labor market and individualized salary increases.
- How does the current inflation rate in France compare to historical levels?
The current inflation rate of 1.8% is lower than the 6% inflation rate experienced during the Covid-19 crisis.
- What is the European Central Bank’s stance on interest rates?
The European Central Bank has lowered its deposit rate to 3.5%, offering some relief to households and businesses.
