Ways of in-depth reform of minimum wage revaluation

Different context, same recommendations. In its annual report, which was sent to the government and social partners on Wednesday, November 30, and which the world had access to, the panel of experts on the minimum wage surprisingly recommends against raising the minimum wage by 1.^Eh January 2023 and suggests three reform paths to overhaul the current renewal system.

Minimum wage increases are now indexed to two values: inflation, after the Consumer Price Index for the poorest 20% of households, and half of the annual increase in purchasing power, the basic hourly wage of workers and employees. In “normal” times, i.e. without any particular inflation, this automatic increase is 1^Eh January of every year. In addition, the government can give an additional bonus, the so-called “boost”. The group of experts created in 2008 informs the executive authorities about the orientation given to the minimum wage.

On the other hand, in this period of high inflation, which according to INSEE’s latest calculations reached 6.2% in one year in September, growth is related. After two increases in 2021, the minimum wage saw three new revisions in 2022: 1.^Eh until January 1^Eh May and 1^Eh August, or a total of +5.6% for one year (today €11.07 gross per hour, or €1,678.95 gross monthly). If we include the October 2021 revaluation, the increase is even 8%.

“Strengthening the role of collective bargaining”

Therefore, knowing that the group, led by economist and Neoma Business School professor Gilbert Ceti, usually never recommends stimulus, it is considered less necessary in this inflationary climate. “Probable revaluation of 1^Eh January 2023, linked to automatic revaluation mechanisms, will protect the purchasing power of minimum wage workers from price index increases., the report said. By group calculations, automatic revaluation 1^Eh January 2023 will be around 1.8%.

This indexation of the minimum wage to inflation divides economists and politicians. Some consider it essential to protect the purchasing power of the most modest and call for the measure to be applied to all wages. However, others believe it could lead to fatal labor cost increases for companies, leading to massive job losses.