The SMIC in the age of the 35-hour week

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As it does every year, the French government reviewed and raised the SMIC national minimum wage as of 1 July 2000. However, this year, due to the implementation of the law on the 35-hour working week, two different levels of pay, corresponding to two separate SMICs, have been laid down.

On 26 June 2000, the government increased the level of the national minimum wage (salaire minimum interprofessionnel de croissance, SMIC) from 1 July. However, this year, the rise in the SMIC has taken place in the context of the law on the 35-hour working week (FR0001137F), with two different forms of increase in the minimum wage.

The SMIC is a national Minimum Wage (Guaranteed), set by the government and calculated on an hourly basis. Hitherto, the SMIC has been revised by the use of two mechanisms referring to different factors:

  • index-linking. Every time the consumer price rises by at least 2%, the SMIC is raised by the same percentage, as of the first day following the publication of the relevant prices index. However, this mechanism, which is still being used, is applied only once a year during a period when inflation is low; and
  • economic growth. The law provides that every year, after consultation with the National Collective Bargaining Commission, the government sets the new rate by cabinet decree to take effect as of 1 July. The rise must reflect price rises (inflation) and half the increase in the purchasing power of blue-collar workers' basic hourly rate of pay (salaire horaire de base des ouvriers, SHBO). The government may grant a higher increase by giving what is popularly termed a coup de pouce, or "boost".

The law on the 35-hour week has altered this mechanism for setting the SMIC (FR9907101N). The government decided that the reduction of working time must result neither in a drop in the purchasing power of minimum wage-earners on a 35-hour week, nor in an automatic pay rise for those who are still working a 39-hour week (which would have brought about an 11.3% increase in the hourly cost of the minimum wage).

This is the reason why two different types of SMIC now co-exist. One is for people who are still working a 39-hour week (and to whom the old mechanisms still apply), and the other is for those who are now on a 35-hour week. A guaranteed monthly wage (garantie mensuelle de rémunération) is now applied to the latter, 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).

The increase in the hourly SMIC has been set at 3.2% in July 2000, due to the high rise in the SHBO (5.2% in the past 12 months). The SMIC now stands at FRF 7,101.38 per month, ie for 169 hours' work, for those still on a 39-hour week. The guaranteed monthly wage has risen by 1.45% (the SMBO having increased by only 1.7% over the past 12 months). The monthly SMIC now stands at FRF 6,981.46 per month, ie for 151.67 hours' work, for those now on a 35-hour week. Employees now working a 35-hour week have thus been "penalised" to the tune of FRF 119.92 per month vis-à-vis others who are still on the 39-hour week.

In July 2000, the rise in the SMIC has been effected with no "boost" from the government. The relatively high increase in the SMIC (3.2%) compared with that of 1999 (1.9%) (FR9907101N), has basically been due to this year's considerable growth in the SHBO.

According to the government, the two SMICs should be merged in five years' time. However, many experts predict that to manage this, "boosting" will be necessary. This has provoked complaints from the MEDEF employers' confederation, which "fears a 20% rise in the hourly SMIC over the next five years".

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