Among the bitter realities that fuel the French protest vote, there's one that stands out at the end of every month: their pay slip. Half of French employees earn less than €2,091 net per month – the median wage in 2022 – and a growing proportion earn even less than that, especially the minimum wage, set at €1,398.69 net per month. Whereas three years ago these minimum wage earners made up just 12% of the workforce, the figure is now 17% – 3.1 million people.
This phenomenon is nothing new. It was seen in the early 2000s when the 35-hour working week was introduced. The Yellow Vests movement of 2018-2019, triggered by a rise in fuel taxes, highlighted the anger of workers facing impossible situations at the end of every month. But the return of inflation, since 2022, is propelling even more workers into the "low-wage trap" through a pernicious mechanism.
While the minimum wage, legally indexed to price rises, has been increased several times (+12.6% in total since 2021), the basic wage for both white-collar and blue-collar workers (+9%) has not followed suit. As a result, there is a growing number of people who were previously paid just over the minimum wage and are now being pulled down to that level. And their feelings about being downgraded is music to the ears of the far right. Moreover, the resulting erosion of their households' budgets undermines their commitment to work and weighs on overall consumption, the main driving force behind the French economy.
Employees are also kept in the low-wage bracket in part because of a system of tax exemptions that are applicable only to the minimum wage, which encourages employers to pay no more than the minimum. An employee on minimum wage is a godsend for the employer in terms of exemptions from social security contributions.
Taking action
There is an urgent need to correct the consequences of this mechanism, without waiting for the rebalancing expected from the slowdown in inflation. President Emmanuel Macron, in promising to "do everything to make work pay better" at his press conference on January 16, seemed to understand this. And while this situation largely depends on the balance of power between unions and employers in their negotiations, now is also the time for the government to take action.
While a return to the general indexation of wages, abandoned in 1983, would not be a sustainable solution, due to its inflationary nature, it is up to the government to strongly encourage employers to share their profits more equitably with their employees, to motivate them by offering training opportunities to encourage skills upgrading and mobility in their careers.
But the main lever available to the government is a complete overhaul of the system of tax relief for low-wage earners. They must reduce contributions on salaries only slightly above the minimum wage, and make exemptions conditional on promotional actions. All incentives to better remunerate employees must be explored. Social justice, the dignity of workers and the cohesion of the country are at stake.