What will remain of the reductions in employer contributions following the examination of the budgetary texts this fall? The government wants to increase the amount of these charges, currently reduced for low wages, in order to make savings in a very degraded budgetary situation. But several parliamentary groups do not intend to validate this project and question this logic of increasing labor costs, also denounced by employers.
The Minister of the Economy, Antoine Armand, declared on Sunday November 3 Echos to want “mitigate” and compensate for the increase in these contributions initially planned. To try to see clearly, franceinfo returns in four questions to these reductions from which businesses benefit and which could be reduced.
What contribution reductions do companies benefit from?
Currently, companies benefit from aid for certain salaries they pay, between 1 and 3.5 times the minimum wage, that is to say between 1,398 euros net and 4,800 euros net. Within this very broad range, there are different relief thresholds. There can therefore be strong threshold effects: for an employee at 1.59 minimum wage, a business manager thus benefits from 13 points of exemption from contributions, whereas if he increases it to 1.61 minimum wage, it's half as much. In total, these exemptions from employee contributions, very concentrated at the minimum wage level, now cost the public finances 75 billion euros per year.
What is the government's initial plan?
During the presentation of the Social Security financing bill (PLFSS) for 2025, the government defended on October 10 a “first stage of overhaul of social security contribution reductions” to limit “the low-wage trap phenomenon”. This “structural reform, which will be carried out in two stages, in 2025 and 2026”plans to increase employer contributions between 1 and 1.3 minimum wage by two percentage points in 2025, then by two additional points in 2026. These contributions will, however, fall for salaries between 1.3 and 1.8 gross minimum wage and will go back further. This reform should bring 4 billion euros to Social Security.
Business aid for low wages “are becoming too expensive”underlined the Minister of Labor Astrid Panosyan-Bouvet, to justify reviewing the scale, on the basis of several recent reports. “It’s not a step backwards, it’s a slowdown”argued his Budget colleague Laurent Saint-Martin, even proposing to “discuss” of the expected gain of 4 billion euros.
Why is the overhaul of contributions criticized?
Michel Barnier and his ministers have experienced several setbacks on this issue. On October 22, the deputies of the Social Affairs Committee, in particular those of the Macronist groups, LR and RN, spoke out against the overhaul of employer exemptions. Eight days later, in a public session, a majority of parliamentarians deleted this overhaul, against the advice of the government. For the parliamentary groups of the center, right and far right, the revision of these reductions would increase the cost of work. “Stop saying that these are savings, these are increases in compulsory contributions”thus denounced the former Minister of the Interior, Gérald Darmanin.
Furthermore, the overhaul of reductions in these contributions is opposed by employers. According to a joint press release from Medef, the Confederation of SMEs, U2P, FNSEA and Udes, reducing them would represent “an additional burden of more than 5 billion euros that would have to be borne” businesses, trimming “mechanically their margins”at the risk of causing “job destruction”particularly for employees close to the minimum wage.
How could a lower than expected increase in contributions be compensated for?
In Les EchosSunday November 3, the Minister of the Economy declared that he wanted “improve” the initial proposal and “mitigate” the increase in employer contributions on low wages, in exchange “other efforts” which may relate to working hours. This could “take several forms, notably an increase in working hours – which remains insufficient in France”estimates the minister. The abandonment of a second public holiday “is one avenue among others”according to him. “The objective must be, in any case, to increase the number of hours worked over the year, to be able to finance our social protection model to which we all care. We will make proposals on this subject”defends the minister.
Despite the opposition of a majority of deputies, notably those of the “common base”, the government retains control: it could decide to introduce the reform of its choice in the final adopted text via the use of the article 49.3, to the National Assembly. He would then expose himself to the tabling of a motion of censure which could overthrow him, if it was voted on by 289 deputies.
