SMIC minimum wage increased

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On 1 July 2004, France's SMIC national minimum wage was raised by between 2.1% and 5.8%. Although highlighted by the government and media, the 5.8% increase applies to only a minority of SMIC recipients (those still working a 39-hour week), and most recipients will see a lower rise, of no more than inflation in some cases.

The hourly rate of the statutory national minimum wage (Salaire minimum interprofessionnel de croissance, SMIC) was raised as of 1 July 2004, in line with the provisions of the January 2003 'Fillon law' (FR0209105F and FR0208102F). The hourly rate of the SMIC rose from EUR 7.19 to EUR 7.61. This increase however only affects employees still working a 39-hour week. For those in companies that have cut their working time to 35 hours per week, there will be a smaller rise in the monthly minimum wage.

There are currently a number of different SMIC rates depending on the date when the worker in question started working the statutory 35-hour week (FR0007177N). Just under 1 million workers (those still working a 39-hour week) are affected by the increase in the hourly rate of the SMIC, and have thus seen their pay rise by 3.7%, plus 2.1% to adjust for inflation, bringing their gross hourly wage from EUR 7.19 to EUR 7.61 (ie a rise of 5.8%) as of 1 July. For all the other workers on the SMIC, the rises will be lower, depending on when their company changed over to the 35-hour week. For those who switched after 1 July 2002, there will be no additional increase, and the rise will only cover inflation. This means that their purchasing power will be unchanged. For the others, the increases in addition to inflation will be 0.2%, 0.6%, 1.2% or a maximum of 1.6%.

The SMIC recipients who are on the 35-hour week are covered by the 'guaranteed monthly wage' (garantie mensuelle de rémunération, GMR) scheme established by the previous Socialist-led government under the 'Aubry laws' on the reduction of working time (FR0001137F). To avoid workers seeing their wage being cut by the same proportion as their statutory working time, the GMR provided that workers receiving the SMIC who changed over to the 35-hour week would have their monthly wage maintained. This system breaks with the idea of the SMIC being index-linked to growth, as it had been since its establishment in 1970.

Ernest-Antoine Seillière, the chair of the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) employers' confederation, criticised the latest increase in the SMIC, arguing that it would operate 'against job creation'. He also warned against any temptation to reverse the cuts in employers' social security contributions on low wages that the Aubry law (passed by the previous government) had granted to companies as a trade-off for the 35-hour week.

The objective of returning to a single monthly rate of SMIC between 2002 and 2005, as expressed in the 2003 Fillon law, assumed a rise of up to 8% in the hourly rate of the SMIC by 2005. At the end of July 2004, when announcing the outlines of the state budget for 2005, the Prime Minister suggested rescheduling this rise so that it was spread over 2005 and 2006. All the trade unions condemned this idea. Several parliamentarians from the governing conservative coalition have also argued that the government should abandon this new plan and stick to the original schedule.

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