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The question of purchasing power is the main subject that worries voters. Despite its progress during the Macron five-year term, households are currently suffering from rising energy prices.
Since the start of the school year, in all the polls, it has been the priority of voters’ priorities; before the climate, security or immigration. Some economists are surprised: purchasing power increased during Emmanuel Macron’s five-year term, for all categories, on average by +0.9%, or around 300 euros per year, whereas it stagnated during the mandates of Nicolas Sarkozy and François Hollande, indicates the study of the OFCE. If this subject tops the list of concerns, it is primarily because of a feeling: the job market has regained its tonus with the creation of a million jobs, and consequently the fear of unemployment s is fading and the French are more concerned about the evolution of their disposable income.
Second explanation: soaring energy prices
Oil and especially gas prices have skyrocketed since this fall, they have jumped on average by more than 20% in 2021 and this is hurting the wallet a lot. Because the expenditure of energy is essential for heating and moving. Again according to the OFCE, 60% of households lost purchasing power last year. If we focus on the present, this deadweight loss is confirmed: according to INSEE in the first quarter, the purchasing power of the French lost 1.4% compared to the last quarter of 2021. This is the largest decline since ten years. INSEE, which is counting on inflation at 4% this year, is categorical: purchasing power will again be eroded this year, for all social categories. Because the Russian invasion in Ukraine will continue to tighten the prices of oil, and also those of food products.
What are the solutions proposed by the candidates?
There are those who want to make the State pay, by lowering social contributions, this is the program of the two far-right candidates Marine Le Pen and Eric Zemmour; the candidate president also wants to put public finances to work with boosts to the incomes of the poorest retirees and single mothers. And a measure for all: the abolition of the audiovisual license fee. And then there are those who want to play on wages. Valérie Pécresse, for the right, proposes an increase of 2% per year for 5 years. Jean-Luc Mélenchon, the best-placed candidate on the left, sees big with a minimum wage, a minimum wage of 1,400 euros in May, and a major social conference on wages.
Can these measures improve the purchasing power of the French?
Through the reduction of social contributions and taxes as well as targeted aid measures, the improvement will be immediate but it can have negative effects in the medium or long term by weakening the social coverage of employees, which is what is called deferred purchasing power. And if inflation is at 4%, that will probably not be enough to preserve purchasing power. In the 1980s, when inflation was high, the adjustment was made through wages. But in 1983 there was the “turn of rigor”, that is to say the end of the indexation of wages, assumed by a socialist president, François Mitterrand. Since companies are relatively spared in the effort required. With the record profits they are generating and the tax reductions they are promised, they are nevertheless well placed to play their part in improving purchasing power.
►In short
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