2023-10-14 07:00:00
At a time when inflation continues to weigh on household wallets, the government will bring together employers and unions on Monday October 16 for a social conference on wages. A question already promises to be crucial at the heart of the debates: how to increase low wages?
Marc Ferracci, Renaissance MP and economist, but also co-author with Jérôme Guedj (PS) of a recent report on exemptions from charges, discusses different avenues.
Point : “Low wages” will be at the heart of the social conference on October 16. What is the diagnosis made?
Marc Ferracci: The problem is that many people spend part of their professional career on the minimum wage or only move away from it moderately. It is of course multifactorial, but we can start from one observation: we are one of the countries where the minimum wage is the highest (62% of the median salary). In Germany, it is around ten points lower. France is the only country where the minimum wage is indexed to both prices and wages. In periods of high inflation, as at the moment, the strong increase in the minimum wage therefore tends to flatten the salary scales, because the salaries above do not increase as much…
READ ALSO Artus – The truth about France’s economic difficultiesThe other debate concerns the existence or not of “low-wage traps” due to exemptions from social charges, which would be a brake on salary increases. The answers to this are unclear. Academic work shows that there is no absence of salary progression near the exemption thresholds (1.6 or 2.5 in particular). On the other hand, it is possible that there is an interaction between the activity bonus whose exit point is close to the first exemption threshold, at 1.6 minimum wage. Concretely, it is possible that at this level, there is, during negotiations between boss and employee, little interest on both sides to increase gross remuneration.
We should first look at exemptions from charges: we are in a system which has experienced a real runaway.
What are the solutions ?
We should first look at exemptions from charges: we are in a system which has experienced a real runaway. In 2024, we will pass the threshold of 80 billion euros in general reductions: when the minimum wage is increased, the scale of salaries affected by these reductions increases. The problem is that exemptions on high salaries are not effective in terms of employment or competitiveness. This is why we proposed with my colleague Jérôme Guedj the elimination of exemptions on salaries between 2.5 and 3.5 minimum wage, an amount of around 1.5 billion which could, for example, be switched to low and intermediate wages. A more global and ambitious approach could be considered: rather than spending so much on cost reductions, let’s use part of this money to support the activity bonus, which is a system which has the merit of being able to be targeted at families. single parents for example and let’s ensure that the minimum wage increases more slowly, by letting the social partners negotiate it, as is the case in other countries.
Should we, as the CFDT proposes, remove the exemptions from charges for branches which have minimums below the minimum wage, which means that more and more levels automatically find themselves at the level of the minimum wage?
This problem exists, but its scope must be put into perspective. Photographically, there are many, around 140 branches out of 171, but this is because many branches are in the process of negotiating, and as the minimum wage is revalued several times a year at the moment, these negotiations are having difficulty keeping up. rhythm. At the end of August there were only 13 branches which have had minimums below the minimum wage for more than a year. I am rather in favor of putting pressure on these branches, as we did last year with a legislative provision forcing them to merge if they did not increase their minimums.
READ ALSO Surprise ! What if France was already in “full employment”? On the other hand, as we wrote in our report with Jérôme Guedj, conditioning exemptions on branch minimums is not a good option because this would amount to giving exemptions two potentially contradictory objectives: supporting employment and increasing wages. Furthermore, there would be legal and operational difficulties, because not all companies in the same sector apply sector conventions in the same way.
And what to think of the idea of a general increase in wages and in particular the minimum wage?
At the level of the minimum wage, the elasticity of employment to the cost of labor, that is to say the sensitivity of employment to the cost of labor, is one: this means that a 10% increase in the cost of labor work generates 10% fewer jobs. There are approximately 2 million employees on the minimum wage, so there are 200,000 fewer jobs at the minimum wage level. And the impact would be even more negative because an increase in the minimum wage is reflected up to around 1.4 minimum wage. It’s suicidal in terms of jobs, let’s not play sorcerer’s apprentice! We should rather negotiate closer to the ground, in companies rather than in branches, and to do this increase the bargaining power of employees in the company.
We must increase access to training for the less qualified, which allows them to have more skills.
Comment ?
There are several avenues. At the individual level, we must increase access to training for the less qualified, which allows them to have more skills, be more productive and therefore better paid. This can be done, for example, by providing the CPF in a more differentiated manner depending on the qualification. In short, put more money on those who need it. There must also be more co-financing from employers: the skills development plan could be the subject of negotiation, and not simply information to employee representatives, as is the case today. today. The other way to increase the bargaining power of employees is to facilitate their mobility: changing jobs is often the best way to get a raise! The problem is that the less qualified you are, the less likely you are to change employers for reasons of qualification, or mobility, you have, for example, less savings to move.
READ ALSO Budget 2024: will we really be able to avoid tax increases? We should strengthen systems that already exist, such as unemployment insurance for employees who resign with a professional project, which is not taking off enough because we have put too many constraints in place to prevent it from costing too much, such as the obligation to go through professional development advice or the condition of five years of activity without interruption for the last five years. Another possibility to promote mobility: the establishment of the universal time savings account, that is to say the possibility of saving time to use it at another point in one’s career, for example for training, which will soon be the subject of negotiation between the social partners. Finally, we must also strengthen the bargaining power of employees at the collective level.
With what levers?
There is an elephant in the room of our model of social relations: it is the level of union membership, among the lowest in the OECD. However, there is a direct link between union density and the ability to capture a greater share of the added value in negotiations. It’s easier when you are an employee representative to build a balance of power when you have a lot of unionized employees and you can, if necessary, initiate a conflict. I don’t think this will be on the agenda of the social conference, but there are ways to encourage membership. In other countries, you need to be a member of a union to benefit from negotiated agreements.
The question of part-time work will also be on the table…
This is a crucial element and we need to put the work back into practice on this subject. First, women are the most concerned, particularly due to issues of childcare constraints. We must therefore move more quickly towards the public early childhood service [il s’agit de la promesse de « garantir l’accueil de chaque jeune enfant », faite pendant la campagne d’Emmanuel Macron, NDLR]. From this point of view, the oppositions were astonishingly irresponsible in voting against the article of the full employment bill which initiated this public early childhood service. Then, we must think about improving contracts which make it possible to have several employers to allow employees to increase their quantity of work, while maintaining the security of the permanent contract. There are some today, but which have not necessarily found their audience, such as the temporary permanent contract or the permanent contract for employability purposes, or employer groups…
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