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| Wages in France will continue to increase in 2024. (Source: OMFIF) |
Six months before the European elections, the issue of wages has been put at the top of the agenda.
Over the past few months, French President Emmanuel Macron has been relentless in encouraging employers to support their employees’ incomes, while speaking out against professions that have not updated their minimum wage. Meanwhile, unions have mobilized workers whose wages have been repeatedly cut by hyperinflation to hold a united march on the issue in mid-October 2023.
In a speech on January 16, President Emmanuel Macron promised to “bring more dynamism to the issue of employment”.
Wages will increase more than inflation
All current research shows that wages will definitely continue to increase through 2024.
A study by the French central bank Banque de France in late December 2023 showed that the average salary increase is expected to be 3.5% in 2024.
Another report from WTW in mid-January 2024 put the increase at 4%. These figures are certainly relevant to the situation in 2023, when business leaders may have placed high demands on workers, making it more difficult to make a living.
For comparison, the growth of the basic monthly wage (SMB) index did not exceed 1.5% in 2020 and 1.7% in 2021.
More importantly, this growth will take place in a context of stable prices.
“Inflation will be 2.5% in 2024 compared to 5.7% in 2023,” Bruno Ducoudré, an expert at the Macroeconomic Research and Forecasting Department at Banque de France, said in a statement. “This is enough to allow workers to finally see the benefits they enjoy in terms of increased living standards.
By 2024, the prominent French economic policy think tank OFCE in Paris estimates that real household incomes will be 2.5% higher than in 2019.
Conversely, some business leaders will cut profit margins to provide more support to employees. More precisely, people will do what they can.
Pierre Burban, Secretary General of the Confederation of Local Enterprises, assures: “Companies are mobilized to maintain the purchasing power of their employees.”
Éric Chevée, Vice President of the Confederation of Small and Medium Enterprises (CPME) in charge of social issues, added that employers always have the same mindset when it comes to salary increases, that companies can increase the salaries of their employees.
“Increasing the number of employees will remain a top priority for 2024,” said Audrey Louail, president of the Croissance Plus entrepreneurial network.
However, wages will rise more than inflation in 2024, which is good news for workers who have had a tough time in the years following the Covid-19 crisis.
According to the INSEE research agency, average net wages in constant euro terms will fall by 1% in 2022, the sharpest decline observed in the past 25 years.” Some workers earn less than others.
The minimum wage increased by an average of 13.5% after seven increases between January 1, 2021 and May 1, 2023. This helped protect workers’ purchasing power but reduced the proportion of workers earning the minimum wage from 12% to 17.3%. Those living in rural areas were hurt more by rising fuel prices or suffered more from rising food prices.
Skilled workers will be the winners
The employers’ association (MEDEF) said that companies that increased wages in 2023 by an average of 10% were successful in offsetting inflation. MEDEF predicted that the wage increases would continue in 2024, despite the more tense situation.
CFDT union general secretary Marylise Léon pointed out that, besides the pension issue, the wage issue is the cause of the strike in 2023.
“When there is no inflation, the performance and productivity of workers will increase. But when there is an increase in prices leading to inflation, we must take this parameter into account when adjusting the salary increase. Business leaders know very well the reality and difficulties of daily life,” CPME shared.
By December 2023, the union said, 20% of business leaders will earn less than 1,400 euros a month. According to CPME, wage increases will attempt to keep up with or exceed price increases.
The French central bank believes that for active workers, this year will certainly bring valuable rewards, even if 2024 is less favorable, especially due to the taxation of insurance premiums.
For WTW, skilled workers will be the winners. Their survey found that “62% of companies have begun to review their compensation policies for the struggling skilled labor segment.” This is due to a less dynamic labor market where hiring is clearly lacking.
Some negotiations will be “more difficult this year,” said Alain Di Crescenzo, president of the French CCI. The real estate crisis will have a knock-on effect that will make wage negotiations in the construction and real estate sectors much more complicated than in 2023. This is not due to a lack of will on the part of companies, but simply because the market is shrinking.
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