Why an increase in the minimum wage?
Since 2012, the minimum wage has only increased in line with inflation, without additional support from successive governments. Clément Carbonnier, professor of economics at the University of Paris 8, underlines in the columns of Le Figaro the importance of such a revaluation to support the purchasing power of the French. «It therefore seems logical to plan such a catch-up to really support the purchasing power of the French »he believes.
A sudden increase
Jean-Luc Mélenchon, founder of France insoumise, proposes an immediate increase in the minimum wage to 1,600 euros net, which represents an increase of 14.39%. According to Bertrand Martinot, economist attached to the Montaigne Institute, this increase is more revolutionary than a gradual increase over several years.
The economic consequences
A sudden increase in the minimum wage could lead to a “flattening of the distribution of wages”, explains Bertrand Martinot. Currently, around 17% of employees are paid the minimum wage. By revaluing it to 1600 euros net, this percentage could reach between 25% and 30%. This phenomenon could create a feeling of salary catching up, although the employees concerned do not see their salary decrease in absolute terms.
Impact on employment
There are numerous criticisms regarding the potential impact of this measure on employment. Michel Picon, president of the Union of Local Businesses (U2P), believes that many small traders and craftsmen will not be able to support this increase. Bruno Le Maire, Minister of the Economy, predicts job destruction, estimating the risk at 500,000 jobs destroyed.
A high cost
The proposal could cost the state dearly. Stéphane Carcillo, professor at Sciences-Po, estimates that this measure could cost around 4 billion euros per year, taking into account the increase in reductions in charges and the state payroll..
To avoid negative effects on employment, some economists suggest alternatives. Clément Carbonnier proposes combining the revaluation of the SMIC with aid to businesses and training for employees in order to improve their mobility and their skills.
Stéphane Carcillo calls for a strengthening of the activity bonus, a more virtuous system which takes into account household activity without increasing the cost of labor. This measure has already been in place for around ten years and could be a more effective lever to fight poverty.
The New Popular Front’s proposal to raise the minimum wage to 1,600 euros net per month is an ambitious measure which aims to improve the purchasing power of the lowest paid French people. However, it raises serious concerns about its impact on employment and the economy. The opinions of economists differ, some seeing this measure as a necessary catch-up, others as a threat to the economy.
