Minimum wage increase pressure

5th of August 2022 Article by Christian Bouzols
Minimum wage increase pressure

Christian Bouzols in France explains the increase in the minimum wage is causing stress in the sector.

Due to inflation, the official minimum wage in France was increased on May 1, the third increase in just seven months. This minimum wage, called the SMIC (Salaire Minimum de Croissance) now amounts to €1,302.64 net a month. The two million workers who were on the SMIC are therefore going to get a rise of 33 euros a month, bringing their total rise to 5.75 per cent since August 2021.

As a result, the SMIC has now overtaken the lowest wage levels provided for by wage agreements in a majority of occupational groups. These are economic sectors with more than 5,000 workers.

According to a calculation by the CFDT trade union, this recent official minimum wage increase means the SMIC exceeds the lowest collectively agreed wage in 83 additional occupational groups. If we include the two earlier SMIC increases, the number of occupational groups where the SMIC has become higher than the lowest agreed wage has grown to 144 out of a total of 171. Thus, in 84 per cent of occupational groups, workers on the minimal agreed wage will get less than the SMIC and this has triggered several strikes and demonstrations recently.

“We had lost the knack of managing inflation, of handling the process of continuously having to re-calculate rates and wages,” says Eric Chevée, vice-president in charge of social affairs at the Confédération des Petites et Moyennes Entreprises (CPME). “While the matter of wages is obviously crucial if we want to keep workers and recruit new ones, it’s not easy to have all wages reflect both inflation and SMIC increases.”

“You can only give what you have” is what Philippe Jouanny, president of the French federation of cleaning companies, had to say. “As a result of the first SMIC increase, the lowest wage level according to our industry agreement has fallen one cent below the SMIC, while the previous increase, of 1.05 per cent, was only agreed on April 1. If your profit margin is between one and three per cent and your wage bill is equal to 80 per cent of your service delivery, you’re not going to have any margin left if your wages are to increase by two per cent”.

Cleaning sector management and labour have been negotiating the wage situation since April, but Jouanny believes the state should act more responsibly. His point of view is that: “Given that public procurement represents 25 per cent of our business, we should have a system whereby wage increases could be passed on to our rates, this being agreed at the signing of contracts and even implementable during the contract.”

The CDFT union believes the discussion between the interested parties shouldn’t only deal with minimum wage issues but also with the employment classification system, called ‘grille de classification’, on which the employer contribution exemptions given to companies for their lowest paid workers are based. These exemptions cover wages rising up to 1.6 the value of the SMIC, meaning the higher the SMIC, the greater the exemption on employer contributions.

In other words, the state’s financial cost in helping companies by reducing their employer contributions will paradoxically rise if low earners get wage increases, which would not encourage the state to promote wage increases for low paid workers.

 

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