Renaissance MP Marc Ferracci wants to “remove contribution exemptions on high salaries”

Solutions to increase wages and in particular the lowest wages will be the subject of the social conference which will be held in just a week around Prime Minister Élisabeth Borne, with social partners, unions and employers.

>> Low wages: Élisabeth Borne threatens to sanction employers who maintain salary scales below the minimum wage

Marc Ferracci, Renaissance MP, labor specialist, explains why he intends to table an amendment concerning job creation which is not there, according to his report on exemptions from employer contributions.

franceinfo: You looked at a tool which is supposed to promote employment in France: these are exemptions from family, pension and health contributions. You show in a report that you wrote with the socialist deputy Jérôme Guedj, that these exemptions exploded to reach 73.6 billion euros last year. It is enormous. How is it possible ?

Marc Ferracci: This is rather good news because the exemptions are calculated on payroll. So when employment increases, which is the case today, and when wages increase, which is the case today, exemptions increase. However, you are right, it is extremely expensive for the state budget. There is a very important issue: what we wanted to do in this report is to evaluate the effects, to know whether all the exemptions actually create jobs.

And precisely, should these exemptions be maintained?

The answer is not the same depending on whether the exemptions relate to high salaries or low salaries.

On low salaries, the exemptions are effective. But what we demonstrate in this report, by interviewing many researchers, but also many actors in the field, is that the exemptions which relate to high salaries, between 2.5 and 3.5 SMIC (between 4 000 euros and 6,000 euros) do not create many jobs.

Marc Ferracci

at franceinfo

They do not greatly improve the competitiveness of businesses. And so we propose in this report to remove the exemptions which relate to high salaries and to maintain those which relate to low salaries.

How much money do you recover if you remove these exemptions from contributions on salaries between 2.5 and 3.5 SMIC?

This represents 1.5 billion euros, which is low compared to all the reductions: for next year’s budget, we will approach 80 billion. Nevertheless, we chose to focus on exemptions, which many studies show are not effective, in order to have a rational, effective approach to public spending. With a debt of 3,000 billion euros and rising interest rates, we must do everything in our power as MPs, as legislators, to ensure that the euros we spend on behalf of the French achieve their objective. And this is not the case for exemptions on high salaries.

Do you know that the Minister of the Economy, Bruno Le Maire, does not want to hear about this removal of the exemption from contributions on high salaries?

We will have this debate and I hope that we will have it in the hemicycle. I will probably table an amendment to this effect. I hope that we will have the opportunity in a very courteous, very republican manner to debate this subject. But beyond this 1.5 billion euros in exemptions, there is a story of method behind all this. We set ourselves the objective of systematically evaluating public spending.

You show that these exemptions are not effective, but your opinion diverges from that of the socialist deputy Jérôme Guedj on the reuse of this 1.5 billion euros.

Indeed, we have the same recommendation to remove these exemptions, but we do not necessarily have the same ideas on what we use this billion and a half euros for. I would like us not to increase the cost of labor for businesses. So we are recycling this billion and a half euros into cost or tax reductions for businesses, provided that they are more effective in terms of job creation.

You therefore want to strengthen the exemptions from contributions between a minimum wage and a minimum wage and a half. Are you not afraid of reinforcing what we call low-wage traps, which would slow down salary increases throughout one’s career?

With this report, we asked if there were indeed these trapping effects in particular places, for example where you have thresholds, where exemptions become less important at 1.6 SMIC. Are employers there saying “I don’t want to go beyond that because it will cost me more” ? What the studies say is that there are not many salaries that remain stuck at this threshold and that do not increase beyond 1.6 SMIC. However, we remain cautious.

Low wages will be the subject of the social conference which is being held next Monday. Sixty branches still have salary scales that are below the minimum wage. Should contribution exemptions be made conditional on negotiation?

Yes, it’s a proposal that’s in the air. Already 60 branches is a lot. If we just look at the branches that haven’t traded for over a year. There are 11 or 13. So we still have to put things into perspective. Should exemptions from charges be conditional on having branch minimums below the minimum wage? We are interested in this question in this report. This seems complicated to us and we do not recommend doing it for several reasons. The first is that it is very difficult to know how you treat two companies in the same sector, one of which keeps salaries low, that is to say, compresses salaries around the minimum wage, because the minimum are below the minimum wage. We must still remember that if the minimum wages are below the minimum wage, that does not mean that people are paid below the minimum wage. This means that many employees who do not necessarily have the same qualifications are paid the minimum wage. And that, indeed, is something damaging. We want to fight against this. However, a company that does this and a company that has higher salaries, which are more generous than the collective agreement, are not necessarily intended to be treated in the same way. If you remove the exemptions from both of them, it is not fair and you are not taking an effective approach.

So it’s not happening at the professional sector level?

So indeed, we could consider conditioning at the company level. What we saw in this report is that it already existed. In fact, in our law, there is a law from 2008 which tells companies “if you do not negotiate on the actual salaries in your company, we can cut off part of the exemptions”. The problem is that this law has not achieved its objectives at all. It affected a few dozen, a few hundred companies and it represented a few million euros for a total that we mentioned earlier, between 70 and 80 billion euros. So we see that it is very complicated to do. On the other hand, we can force the branches to merge, which they absolutely do not like to do, if they do not renegotiate their minimums, that can be effective. And then I’m going to open up to something else, one moment or another, to increase your salary, you have to increase your qualifications and your productivity. I am in favor of investing more, including a little more public money, in the training of the lowest-income employees, in the training of the least qualified employees. And I hope that the social conference will raise this subject too.