Minimal increase in national minimum wage
On 1 July 2007, the government increased the national minimum wage (SMIC) by 2.06% to €8.44 an hour. The increase did not exceed the minimum level required by law and in real terms means that those on the minimum wage will only receive an increase of 0.8%. In addition, the Prime Minister, François Fillon, referred to a possible reform of the SMIC – a proposal which was welcomed by the employers, but to which the trade unions reacted negatively.
In July 2007, the French government decided to limit the increase in the legal minimum wage for 2007, raising it to no higher than the minimum legal requirement of 2.06%. In addition, Prime Minister Fillon announced that he wanted to reform the process for deciding on increases in the national minimum wage (salaire minimum interprofessionnel de croissance, SMIC).
Increase for 2007
The minimum legal increase in the SMIC must take at least two factors into account:
- the level of inflation, based on the consumer price index, excluding tobacco;
- half of the increase in the purchasing power of blue-collar workers’ basic hourly pay.
Taking into account both of these factors, the hourly rate of the SMIC was increased from €8.27 in 2006 to €8.44 in 2007 (FR0607019I).
Generally, the government uses this opportunity to give the minimum wage a boost. This year, however, the government decided to limit the increase in the legal minimum wage. Following the July 2007 increase, the gross monthly minimum wage now stands at €1,279, which comes to a net amount of just under €1,006 a month for a 35-hour week.
Employers react positively
The employers reacted positively to the government’s announcement, albeit somewhat discreetly. The Vice-president of the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), Denis Gautier-Sauvagnac – also President of the powerful Union of Metallurgy and Mining Industries (Union des Industries et Métiers de la Métallurgie, UIMM) – represented MEDEF at a meeting of the collective bargaining commission on 25 July 2007. At the meeting, he outlined that he had ‘taken note of the government’s decision’.
Trade unions remain critical
The trade unions unanimously denounced the increase, insisting that it was too small. Maryse Dumas, National Secretary of the General Confederation of Labour (Confédération générale du travail, CGT), denounced the unfairness of the increase, arguing that ‘there is no boost for those on the SMIC, just as for employees in general’, while the employers are better treated. On the same day – 1 July 2007 – the government, like its predecessor, decided to abolish the social contributions to be paid by employers hiring people on the minimum wage in companies with fewer than 20 employees.
National Secretary of the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), Laurence Laigo, stated that the minimum legal increase in the SMIC ‘is not satisfactorily in line with the increase in employees’ purchasing power’. She added that employees ‘do not understand why there has been no boost for the SMIC, when employers’ contributions are being reduced yet again’. At the same time, Michelle Biaggi, National Secretary of the General Confederation of Labour–Force ouvrière (Confédération générale du travail–Force ouvrière, CGT-FO), insisted that the decision not to boost the SMIC was ‘unacceptable’. She added that ‘it would be a scandal to delegate fixing the SMIC to the social partners, because that would lead to abolishing it in the long term’.
Debate over reform of increase mechanism
Speaking about reforming the increase mechanism for the minimum wage, Prime Minister Fillon considered two options: on the one hand, he believes that it is ‘the most reasonable option’ for the social partners to take on the responsibility for the increase, as is the case ‘in all the other countries’. On the other hand, a second option would be ‘to create a committee of experts (comité des sages), which would give an opinion on the subject’.
MEDEF’s President, Laurence Parisot, welcomed the idea of a reform of the SMIC. She outlined that the SMIC constitutes ‘a safety net that should be based on economic criteria’ and not on ‘political criteria or ones related to generosity’.
In contrast, all of the trade unions are both concerned by and critical of this proposal. In CFDT’s view, ‘the SMIC must remain a safety net for the employees. The structure of and increase in pay should be based on economic criteria, promoting work, qualifications and career prospects’. Meanwhile, CGT considers that ‘legal minimum rates are linked to the standard of living of white-collar and blue-collar workers and to growth’, and so workers ‘cannot depend on employers’ good will’. Ms Biaggi of CGT-FO declared that ‘it would be a scandal to delegate fixing the SMIC to the social partners, because that would lead to abolishing it in the long term’.
Contrary to the assertion of the prime minister, direct bargaining by the social partners on fixing the increase in the minimum wage is not that widespread in Europe.
On the issue of minimum pay – and more generally regarding the purchasing power of pay – the social partners should have an opportunity to express their opinions during the conference on pay, which is scheduled to take place in the winter of 2007.
Pierre Concialdi, Institute for Economic and Social Research (IRES)