The Government Confirms its “Attachment” to the Automatic Increase in the Minimum Wage

Finance General News
Government confirms commitment for an automatic increase of the minimum wage in France

The government has rejected a proposal from a group of experts opposed to “nudge” the minimum wage. And said it was committed to the automatic increase in the minimum wage.

The government said on Tuesday that it was “attached” to the principle of an automatic increase in the minimum wage, dismissing a proposal of the expert group on the minimum wage which suggests to reconsider this principle, sparking sharp criticism from the unions.

This group of experts on the minimum wage, consulted every year since 2008 before each revaluation, ruled, once again, against a “boost” on the 1st January.  On January 1st, 2017, the minimum wage increased by 0.93% to 1.480 euros gross monthly(9.76 euros an hour) and 1,151 euros net.

Automatic increase

Failing to boost the minimum wage each year as an automatic increase, calculated according to two criteria: the inflation recorded for the 20% of households with lower incomes and half the purchasing power gain in hourly wages basic worker and employee.

Even this increase was challenged by the report. They call for “reform” to the formula, advocating to index the minimum wage to inflation only, or to “remove any compulsory indexation rule”.  “A reform of the SMIC automatic reset mode is necessary,” they write.

For them, the current formula has led to a minimum wage “high compared to foreign counterparts” but “not very effective in the fight against poverty.” And “the rapid growth of the minimum wage” is “damaging for public finances,” because of the social contribution exemptions granted since the 1990s.

“Fair and decent salary”

The idea to remove any indexation was dismissed by the Labor Ministry, which said on Tuesday that it was  “committed to the principle of automatic progression.”

The current rules “legitimately aim to preserve the purchasing power of the minimum wage workers,” they stressed, noting that “all work must be paid by a fair and decent wage.”

However, the government does not bury the report so far. It recalled that the current calculation method dates back to 1970 and emphasizes that proposals to review this mode of appreciation “will integrate” in the ongoing discussions, including “the development of the profit – participation”.

“A government of the rich”

The proposal of the expert group drew criticism unions. “Not possible,” responded the CFDT. This proposal would go against the “political project intended at the time of the creation of minimum wage: in 1970, the challenge was to bring changes in the minimum wage than the average wage of employees.”

“If the government kept this proposal, it would be a heavy economic and social fault direction, accentuating the image of a wealthy government appeared notably lower APL”, has warned his side Jean-Claude Mailly, secretary general of the FO union.

The FO leader also pointed the composition of the expert group, “mono-color under the economic liberalism.”

“Blast the minimum wage is a serious violation”

Renewed in August, this group is chaired by Gilbert Cette, economics professor at the University of Aix-Marseille. It consists in particular of economists Andrea Garnero (OECD), Isabelle Mejean (Crest) and Marie-Claire Villeval (CNRS).

The CGT has “urged” the government of Edouard Philippe “especially not to follow the recommendations reactionaries” of these economists, inviting, instead, to upgrade the minimum wage “to the tune of 1,800 euros gross per month.” “Blast the minimum wage is a serious and dangerous attack against millions of workers in the country,” she says.

To explain the lack of “push” the report highlights an “improvement” of the French economy, but “a lesser magnitude than that observed in the immediate economic environment in France.”

He cites growth “significantly below that of the euro area,” the decline in unemployment also “lower in France”, or the margin of companies “has not yet regained its 2016 level before the crisis. ”

Given these “obvious weaknesses”, economists recommended to “refrain” from any boost, “so as not to undermine ongoing improvements.”

The state has granted more boost since July 2012, following the election of Francois Hollande. The level of the adjustment for 2018 will be announced by 20 December.

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