LEmployment in France slowed down sharply at the end of 2024, and uncertainty around the scale and nature of the budgetary adjustment in 2025 should not favor a rapid recovery in the labor market. In this delicate situation, which is also accompanied by the end of the inflationary episode, the group of experts that we are forming recommends sticking to the anticipated 2% increase in the minimum wage that occurred on 1is November 2024, and not to go beyond November 1is January 2025.
It should be remembered that, since the end of 2020, the minimum wage has increased by 17%, a little more than inflation (15%), thus effectively protecting the purchasing power of the employees concerned. It now represents 62% of the median salary, France being one of the only countries, with Portugal and Slovenia, to exceed the threshold of 60% recommended by the European Union. The base salary of all employees has only increased by 12%, because salary negotiations have gone slower than the pace imposed by the minimum wage indexation formula.
This formula provides for the minimum wage to be revalued each year by inflation (calculated for the 20% of least well-off households), but also by half of the purchasing power gains of all workers and employees.
Furthermore, as soon as inflation, since the last increase in the minimum wage, exceeds 2%, an immediate revaluation is necessary. The minimum wage has thus been raised nine times since the end of 2020.
A relaxing movement
For the year 2024, this same formula results in an increase of 1.97%, including 1% for inflation and 0.97% for purchasing power – a first since 2021. This revaluation is in principle applicable to 1is January 2025, but we must deduct the increases occurring during the year. However, the minimum wage was increased by 2% on 1is November “in anticipation”. So there will be no additional increase on 1is January in the absence of a boost.
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When the minimum wage increases faster than other salaries, as has been the case in recent years, the salary scale compresses. Many employees are “caught up” by the minimum wage, and the prospects for salary progression are reduced, which fuels a feeling of being downgraded.
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