How the executive plans to increase salaries around the minimum wage

One of the first issues for the future tenant of Matignon will be to increase salaries. Reviewing the exemptions from contributions is one of the anticipated avenues.

Despite the drop in inflation, which has fallen below 2%, purchasing power remains the priority of the French. For Emmanuel Macron, this concern partly explains the vote for the extremes – on the left as well as the right. This is why the head of state asked his teams this summer to see how to increase salaries around the minimum wage, without however increasing the latter to 1600 euros net per month, as the New Popular Front wants.

Today, employers benefit from wage subsidies, there are exemptions from charges for salaries between 1 and 3.5 times the minimum wage, i.e. between 1,398 euros net and 4,800 euros net. And the problem with these exemptions is that they include different thresholds which actually encourage employers to keep their staff at the bottom of the scale. For an employee on 1.59 times the minimum wage, the boss benefits from 13 points of exemption from contributions, whereas if he increases it to 1.61 times the minimum wage, it is half as much. The idea is therefore to eliminate these threshold effects to encourage bosses to help their teams progress.

This removal can be done quickly, because this subject has been in the pipeline for several months. This winter, the government requested a report from two economists, Antoine Bozio and Étienne Wasmer. The latter are working on recommendations, which have not yet been revealed but which the administration is already testing. Bercy is running Excel spreadsheets to evaluate the different scenarios. And according to information from franceinfo, the track that holds the rope is to concentrate, to increase these reductions in charges on salaries up to 2.5 or 3 minimum wages, but by eliminating them beyond that.

These changes could be included in the social security financing bill, and therefore come into force on 1 January, provided of course that the future Prime Minister validates and then that Parliament is in favour. The left is campaigning for increases and should therefore vote for them. The right and the central bloc should follow, especially since this option has one last advantage: by changing the structure of this aid, the State could save money in the process. It should be remembered that all the exemptions from employee contributions cost the public finances 75 billion euros per year.