During his televised speech on Sunday evening, September 24, the President of the Republic closed the door to the idea of indexing salaries to prices which, according to him, would not resolve the issue of inflation.
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The principle is nevertheless logical: faced with inflation, it is enough to increase employees proportionally to take into account the variation in prices. As prices are soaring, salaries should be adjusted automatically. For the Head of State there is no question of it because institutionalizing this system would amount, he says, to creating an “inflationary loop”.
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It is also called the price-wage loop, an infernal loop which only generates inflation. The more prices rise, the more we increase wages, the more employees consume… and therefore the more prices increase since this fuels demand. It is a traditional debate which does not translate into reality today. Economists say it: we are not yet in this configuration.
No automation but companies being singled out
Nothing prevents employees from increasing their remuneration, but the State must not intervene with a strict, institutional rule imposed by law. It is up to businesses to take their share of responsibility. This is the meaning of the message sent last night by the President of the Republic: “In certain sectors, employers must hire better (…). We have many women and men whose hourly rates are not satisfactory.” It thus implies that the room for maneuver to increase wages in a natural way – and not in an administered and automatic way – lies with the private sector.
With inflation, “Large groups have caused their margins to soar”, launched Emmanuel Macron. Will businesses move? Answer on October 16, the date set on the social agenda for this back-to-school season which is already well underway. October 16 is the date chosen for the major conference on low wages. Unions and employers will have no choice but to come out with concrete answers.