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A revision of employer contributions could take place, and low wages risk finding themselves on the front line. According to Capitalif this reform comes to fruition, it could significantly affect the lowest paid employees. However, the latter are already weakened by a difficult economic context. But who will really be the big losers in this situation? Answers to follow!
Support for low wages
With the State seeking to increase your revenuethe debate around employer contributions is gaining momentum. These charges finance social protection by covering health, retirement and other insurance for workers. Remember that it is the employers who pay them.
Thus, to support low wages, employers benefit from partial exemptions on contributions for employees close to the minimum wage. Thus, this boost allowed many French people to access stable employment. However, it represents a hefty bill for the State, estimated at around 80 billion euros per year.
Faced with this figure, some economists plead for a revision of these exemptions to reduce public spending. Increase in employer contributions or change to the exemption system? Whatever option you choose, the consequences are not negligible. As revealed Capitalif an employer plans to increase an employee close to the minimum wage, the additional charges quickly increase the bill.
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These penalized salaries
Exemptions from employer contributions have long played a role as a lever for support low wages. They notably reduce the cost for businesses. But if this system were to disappear, the situation could well change.
In fact, companies would risk seeing their room for maneuver reduced. A real headache for some employers, who will have to choose between maintain wages or accept higher wage costs.
The revision of this system could therefore discourage certain businesses to adjust salaries. For employers, the choice could come down to keeping revenues at current levels or taking on high costs. Result: the lowest paid employees could see their increases become increasingly rare.
Who are then most affected by this reform? According to the Journal of Economicsthese are those earning between 1 and 1.3 times the minimum wage. For them, salary increases could well turn into an increasingly distant promise. However, a salary freeze would be difficult to accept in a context where purchasing power remains a major concern.
Other ideas overwhelm
Although the Assembly rejected the idea of reforming employer contributions, the government seems determined not to abandon this avenue. According to Capitalthe State could well introduce its preferred reform into the final adopted text, in resorting to article 49.3 of the Constitution. It is a quick way to pass unpopular measures without parliamentary debate.
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Moreover, according to the latest developments, the government plans to reduce the impact of this reform on low wages. And employers are also opposed to any measure that could lead to job destruction.
While waiting for the government to decide, employees, particularly those in the lowest brackets, must be patient. Time will tell whether this change will really be favorable or whether it will further complicate the low wage situation. To be followed closely.
