How inflation is distorting the issue of low wages

His beginnings as a guard, Alexandre Cornu, 45, remembers it perfectly. « Entered service on September 19, 2000. Paid about 7,000 francs! Yes, back then it was still the francs! », he smiles behind his thin glasses, one of which is cracked. That was the minimum wage then. Alexandre was then on the first level of the salary table. “I thought I would have a good evolution in this job, I was wrong”he blurts out bitterly. Today a fire and rescue officer in one of the defense towers, he has risen two steps in rank. But after twenty-two years of experience, he is earning minimum wage again: “caught up” by the minimum wage, as he says, which has risen faster than his salary.

This is one of the side effects of inflation measured in France according to the latest INSEE estimate 5.6% yoy in September, after 5.9% in August and even 6.1% in July. Since its inception in 1950, the minimum wage has been indexed to the consumer price index and rises when it does the same. In a “normal” year there is only one revision, in the 1er January. But since 2021 it has had four: at 1er October 2021, until 1er January 2022, to 1er May and again on 1er August, ie a total of +7.76% over one year, which amounts to EUR 98.45 net more per month. The minimum wage today stands at 11.07 euros gross per hour, ie 1,678.95 euros gross per month.

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However, 7.76% is still more than one year’s inflation. Because the minimum interprofessional growth wage is not only indexed to the consumer price index, but also partly to increases in the average hourly wage of blue-collar and white-collar workers. In addition, its level serves as the basis for the entire low-wage architecture in France.

A choice made to prevent the minimum wage from falling away, as was the case for its ancestor, the smig (guaranteed interprofessional minimum wage), between 1951 and 1967. It had then progressed much more slowly than the growth-driven average French wage and productivity gains. Since 1982, the minimum wage level has stabilized between 58% and 63% of the median wage. In addition to this automatic increase, there has only been one additional boost since 2007, following the election of François Hollande. Since then we have been very satisfied with the legal revaluation. More favorable in times of inflation.

For 2022, the latest figures are available from the direction of the animation of research, studies and statistics of the Ministry of Labor indicate that by the end of June, basic hourly wages for blue-collar workers and white-collar workers had risen by 3.5% in one year, and monthly basic wages for all employees by 3.1%. “Because the minimum wage is indexed to prices, not the rest of wages, and because they are not currently increasing at the same rate, we are seeing a narrowing of the gap between the minimum wage and the rest of wages.emphasizes Jérôme Gautié, professor of economics at Paris-I-Panthéon-Sorbonne. This creates a phenomenon of wage flattening at the bottom of the hierarchy, both in the private sector and the public sector. »

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