The minimum wage recorded two close increases. One of 2.2% last October – triggered by the fact that inflation in August 2021 passed the 2% mark, at 2.2% since November 2020 – the other of 0.9% this 1st January. The minimum wage therefore stands at 10.57 euros per hour, i.e. a gross monthly salary of 1,603.15 euros (1,269 euros net).
Nearly 2 million French people are paid the minimum wage – or 10% of employees – and many have difficulty making ends meet. Should we therefore increase the minimum wage, as some candidates are proposing? Many readers ask us this question.
What is it about ?
The minimum interprofessional growth wage (smic) is automatically revalued each year in January according to the rise in prices. Sometimes, when inflation is high, it can be raised during the year, as was the case last October. Since the 1990s, all governments on the left and on the right have chosen not to increase the minimum wage massively – even if “boosts” have taken place, the last dating from the start of François Hollande’s mandate – to give preference to additional aid for low wages (employment bonuses, aid, allowances, etc.).
“The inflation allowance paid to 38 million French people or the energy check are nudges that can supplement a minimum wage in the event of a price increase,” analyzes economist Christian de Saint-Étienne.
But after several confinements linked to the pandemic, and while “second line workers” – often paid at minimum wage – have been “running the machine” for months, the debate is reignited. “A certain number of second-line employees, paid at the minimum wage, have proved to be particularly useful to the economy, specifies Éric Heyer, economist at the French Observatory of Economic Conditions (OFCE). Raising their salary is unanimous. But it is not a question either of increasing all the employees paid at the minimum wage. »
What are the costs and benefits?
Raising the minimum wage would obviously put butter in the spinach of nearly two million workers. “When you choose to pay an activity bonus or additional aid, it’s not the same thing as raising the amount of the minimum wage,” continues Éric Heyer. Because if the minimum wage cannot drop, a premium can be removed and it does not give rise to rights in terms of calculating retirement. »
But raising the minimum wage would be very expensive. To companies first, which should get their hands on the wallet to finance these wage increases. Unless the State pays for this revaluation. Two possibilities then: either by lowering employer, employee or old-age contributions. “It would further deepen our public finances which are already in the red”, denounces Christian Saint-Étienne. Either by increasing the CSG in return or by eliminating other social expenditure, for example. In which case, it would be the taxpayers or the beneficiaries of this removed aid who would suffer.
But for economists, raising the minimum wage would also and above all pose a problem of labor costs. “It must be recognized that 20% of French workers have very low skills and that it is therefore necessary to maintain jobs that require limited productivity, continues Christian Saint-Étienne. If the cost of labor increases, companies will not be able to keep these people. ” Why ? Because the bosses have to deal with the price of the goods and services they sell. “If the cost of labor is too high, companies will have to raise their prices to cope,” continues Éric Heyer. But they will then lose market share and will have to lay off workers to remain competitive. Or else they will relocate. »
Is it doable?
Yes. This is a political decision. “In a context where our European neighbors are increasing the level of their minimum wage and while there are strong tensions on the job market, today there is a window of opportunity to increase the minimum wage in France, believes Eric Heyer. This would have less impact on business competitiveness. »
What about abroad?
In recent months, with the health crisis, a wave of minimum wage increases has been triggered in several neighboring countries. In Spain, the socialist government announced an increase of 3.6% in 2022 while it will be 6.6% in the United Kingdom. Next October in Germany, the rise in the minimum wage (introduced in 2015) will even be 25%. It will then exceed the French minimum wage for the first time. The tricolor minimum wage nevertheless remains one of the highest in Europe, where it varies between 332.34 euros for Bulgaria and 2,256.95 euros in Luxembourg, according to Eurostat.
“What is important is to look at what the minimum wage represents in relation to the average salary, warns Christian Saint-Étienne. International analyzes estimate that a minimum wage should be around 50% of the average salary of a country. In France, it is more than 60% of the average salary. Abroad, it is often rather around 40 or 45%. »
What are the candidates saying?
The President of the Republic, Emmanuel Macron, who has not yet declared himself, does not seem to be considering touching the minimum wage.
On the left and on the far left, they have all positioned themselves on an increase in the minimum wage. Jean-Luc Mélenchon and Christiane Taubira are considering an increase to 1,400 euros net per month, where Anne Hidalgo announced a 15% increase to 1,450 euros net. The communist Fabien Roussel offers meanwhile a minimum wage of 1,500 euros net. Ditto for the ecologist Yannick Jadot but by the end of the five-year term.
On the right, Valérie Pécresse has reviewed her copy on salary increases. If she does not focus her attention only on the minimum wage, the candidate of LR intends to raise the net salaries of the private sector by 10% up to 2.2 minimum wage. Initially, it wanted to transfer old-age contributions from employees to companies. A cost of 8 billion euros for the bosses (and 25 billion for the State) who quickly stepped up to denounce this measure. Valérie Pécresse has finally changed her tune: “the State will take its responsibilities” by financing, in the summer of 2022, a 2.4 point drop in employees’ old-age contributions, which should lead to an increase in net wages 3% before further increases in 2023.
On the far right, the question of the minimum wage also joins that of global wage increases. Marine Le Pen intends, for example, to encourage companies to raise salaries themselves by exempting business leaders from employers’ contributions from 2022, for “any salary increase of 10% granted to all employees earning up to three times the minimum wage”. Finally, the candidate of Reconquest!, Éric Zemmour proposes to “reduce the contributions” of employees, “in order to return a 13th month” to those who receive the minimum wage.
In summary
Raising the minimum wage that affects 2 million people in France is possible and depends on a political decision. But the high cost of this measure will have to be borne either by companies, which will then have to increase their prices at the risk of losing market share and having to lay off workers to remain competitive, or by the State. And if the latter supports this cost, this will have a negative impact on public finances, unless compensated by removing other aid.