Increase in minimum wage in context of 35-hour week

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As is the case every year on the same date, the hourly rate of France's statutory minimum wage (SMIC) was increased on 1 July 1999. In light of the move to the statutory 35-hour working week on 1 January 2000, the government deviated from its practice of announcing a greater increase in the SMIC than that provided for by the legislation. The creation of of a wage supplement for those employees who have moved to the 35-hour week means that there will be two parallel monthly SMIC rates for some time.

The gross hourly rate of the national statutory minimum wage (Salaire minimum interprofessionnel de croissance, SMIC) was increased from FRF 40.22 to FRF 40.72, effective from 1 July 1999. This represents a 1.24% increase from the level set on 1 July 1998. On the basis of the current statutory 39-hour week, the monthly gross SMIC has increased from FRF 6,797.18 to FRF 6,881.68 (based on a flat-rate average of 169 hours per month) from 1 July. This brings the net monthly SMIC up from FRF 5,386.08 to FRF 5,435.84 after social security premiums and contributions are deducted.

The government's 1.24% increase in the SMIC is the minimum required by law, based on a calculation taking into account the rise in the consumer prices index and 50% of the increase in the purchasing power of blue-collar workers' basic hourly pay between March 1998 and March 1999.

Contrary to the two preceding years, the Jospin government did not decide on any extra increase in the minimum wage from 1 July 1999. In the light of the move to the statutory 35-hour week from January 2000, following the adoption of the "Aubry law" in June 1998 (FR9806113F), this decision was designed to prevent excessive increases in labour costs for companies.

The government's decision was described as a "warranted measure "by the CFDT trade union confederation, which is prioritising the reduction of working time. CGT-FO also refrained from criticising the lack of an additional increase, with its secretary general, Marc Blondel stating that "this time it is quite justified. It is fair." "FO will not make an increase in the SMIC an immediate demand." The "priority" for CFTC is a reduction of working time which "maintains purchasing power, including that of the SMIC". However, the union believes that the increase could have been "more significant". CFE-CGC describes the minimum increase as "a present to employers in order to make the 35-hour week law more palatable". CGT was the most vociferous in its comments, stating that the government's failure to provide an additional increase was an issue of "profound divergence" with CGT.

For its part, the MEDEF employers' confederation saw the government's decision to apply only the minimum raise as an exercise of "the principle of caution".

The Minister for Employment and Solidarity, Martine Aubry, pointed out that since the Left came to office in June 1997, "the purchasing power of the SMIC has increased by 6.4%." Furthermore, "this increase in the minimum wage is part and parcel of the move to the 35-hour week and of related negotiations." She pointed out that "all [35-hour week] agreements reached, until now, have provided for workers to retain 39 hours' pay after the move to the 35-hour week" (FR9906190F).

This new minimum hourly rate of the SMIC will still be in effect on 1 January 2000 when the statutory 35-hour working comes into force for companies employing over 20 workers. At this point, the hourly rate of the SMIC will remain unchanged. However, a "differential pay supplement" (complément différentiel de salaire) will be put in place to guarantee the purchasing power of the monthly remuneration of employees paid the SMIC in companies that have either moved to the 35-hour working week or are due to do so. This provision, designed to maintain the remuneration of SMIC earners, will also apply to new recruits taken on in jobs equivalent to those of existing employees, and to part-time workers (pro rata) when their working time is reduced like that of full-time employees. The supplement is calculated as follows:

SMIC (based on 39-hour week) 169 hours per month FRF 6,881.68
SMIC (based on 35-hour week) 152 hours per month FRF 6,175.60
Differential . FRF 706.08

It is the government's view that the provisions designed to reduce employers' social security contributions, which accompany the move to the 35-hour week, will fund the maintenance of SMIC earners' income and increases in their purchasing power. At the same time a reform of employers' contributions will reduce labour costs in respect of low and medium earners.

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