Wage demands re-emerge

Source: DARES

SHBO = blue-collar workers' basic hourly pay; SMB = basic monthly pay, all workers; prix = prices; T4 = fourth quarter.

Following the July 2000 rise, the gross weekly SMIC for employees working 35 and 39 hours is now FRF 6,373.13 and FRF 7,101.38 respectively. In addition, to avoid a cut in the purchasing power of employees on a 35-hour week, the 35-hour week legislation provides for a guaranteed monthly wage (garantie mensuelle de rémunération) for those on a 35-hour week, with increases calculated on the basis of inflation and half the rise in purchasing power of blue-collar workers' basic monthly pay (salaire mensuel de base des ouvriers, SMBO). This wage supplement was raised by 1.45% in July 2000. Therefore, the minimum wage for a 35-hour week now stands at FRF 6,981.46.

Negotiations on the 35-hour week have taken precedence over annual company-level pay bargaining in recent times. The number of company-level agreements relating to pay and bonuses doubled from 1998 to 1999, but agreements on this issue decreased as a proportion of all company agreements by 5% (FR0007178F). It is estimated that "fewer than a quarter of these agreements were reached under the normal framework of compulsory annual wage negotiations" (according to the Liaisons sociales industrial relations newsletter, No. 13196, 13 July 2000). The main reason for this is that the pay issue has largely been approached from the perspective of the impact of the reduction of working time on wages.

Strong economic growth

Since 1998, France has recorded a relatively high economic growth rate, which has brought about a significant fall in unemployment (FR0007179F). A debate has now started over the distribution of the gains from this growth. The share of wages in companies' gross value-added (GVA) is at a 30-year low. Wages made up close to 64% of companies' GVA of in 1970, compared with under 60% in 1998 (peaking in the early 1980s, when wages represented close to 69% of GVA), whereas the share of non-invested profits has risen from 9% of GVA to nearly 17%.

Following 20 years of wage restraint, employees consider themselves relatively poorly paid and would like an increase in their purchasing power. Indeed, a June 2000 study from the National Institute for Statistics and Economic Studies (Institut national de la statistique et des études économiques, INSEE) indicated that a mere 11.2% of men and 10.7% of women considered themselves "relatively well" or "very well" paid. Just over 40% stated that they were "relatively poorly" or "very poorly" paid (under half considered their wage "appropriate"). ("Quand les salariés jugent leur salaire" [When workers consider their pay], Olivier Godechot and Marc Gurgand, in Economie et statistique, No. 331, 2000-1, INSEE.)

Wage disparities grow

Median take-home pay after deductions fell between 1991 and 1997 by nearly FRF 2,000 (not adjusted for inflation), which means that the disparity between high and low wages grew. In addition, INSEE has found that the buying power of average net pay has risen by only 0.5% per year since 1976, compared with an increase of 4% per year between 1951 and 1976 ("Salaires et coûts salariaux" [Wages and wage costs], Alain Bayet and Dominique Demailly, in INSEE Première, No. 449, May 1996). It should also be noted that the proportion of employees earning the SMIC is on an upward trend (11.1% in 1987, 8.1% in 1993 and 12.8% in 1999). Finally, "studies show that the proportion of employees with low wages – defined as wages under two-thirds of the median wage – in all areas of employment has risen from around 11.4% in the early 1980s to 16.1% today".

In the light of these figures, it is easy to see why the trade unions are studying the pay issue with a view to making demands, as industrial relations activity resumes after the 2000 summer holidays.

Unions unanimous on wage increase

All trade unions have stated their clear resolve to push for an increase in purchasing power. CGT-FO's general secretary, Marc Blondel, has stated that the confederation will make wages its major demand, and also wants to see an increase in civil service pay. Similarly, CFTC and CFE-CGC are calling on companies to pass on the benefits of the strong economy to their workers. In the view of CFTC, "companies should not be able to hide behind the move to the 35-hour week," while CFE-CGC contends that "wages, which represent an ever-shrinking proportion of value-added, should be increased, as capital income continues to grow." CGT has put forward three main reasons why wages should be increased: the French economy has returned to a period of growth; consumption requirements need to be met; and vocational skills and qualifications have to be acknowledged. Finally, CFDT also admits that wages are currently a burning issue. However, the priority for this union confederation remains employment and improving the status of workers in precarious employment.

In some industries, employers are facing labour shortages. For their part, companies with a workforce of under 20 are concerned about the significant rise in the SMIC before they have moved to the 35-hour working week. In these two cases, employers' associations have spoken out against a looming increase in wage costs.

Commentary

The wage restraint and widening of disparities experienced by workers over the past 25 years continues, despite the return to a growth economy. Employers have no intention of significantly increasing wages despite sizeable company profits. The government has, in an attempt to redistribute purchasing power, decided to cut taxes, especially personal income tax and employee social security contributions for low-wage earners. However, the relevance of these decisions can be challenged, since the most vulnerable - long-term unemployed people and RMI minimum income recipients - will not benefit from an increase in their minimum social benefits. (Simon Macaire, IRES)