Growth starts again ... but not wages

Home"Anciens1"Growth starts again ... but not wages
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Job creation in the private sector has peaked, with 268,800 jobs created in 2017. At the same time, wage growth remains contained.

Stewards of Air France, employees of the motorway companies Vinci ... since the beginning of the year, employees are demanding increases. But, for the moment, the rise in wages remains "contained" despite the economic recovery, the fall in unemployment and the creation of jobs. The growth is starting again. Job creation in the private sector peaked, with 268,800 jobs created in 2017. As for the unemployment rate, it reached the end of 2017 its lowest level since 2009, at 8.9%, telling the minister of Labor that the decline in mass unemployment was "under way".

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At the same time, "wage growth remains contained," says Bruno Ducoudré, economist at the French Observatory of Economic Conditions (OFCE). Traditionally, economists believe that falling unemployment leads to higher wages. In its latest note of conjuncture, published Tuesday, INSEE considers that the unemployment rate "remains high" in France and that it "still does not strongly support wage increases". "There may be a delay between the time when we start to have enough job creation and the pressures on recruitment and the moment when it starts to show up in statistics," says Ducoudré.

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In 2017, according to Deloitte, the increases were 2.5% for executives and 2.1% for non-executives. For 2018, firms LHH-Altedia and Deloitte predict wage increases between 1.8% and 2%. The economist Patrick Artus (bank Natixis) sees in this increase "contained", if it was confirmed, "a considerable improvement in the functioning of the labor market." "Because instead of having more wages that will eat the surplus of the recovery, there will be more permanent contracts," he said recently during a meeting at the Ministry of Labor. The mandatory annual negotiations, the so-called "NAO", have begun and employees are putting pressure on their directions. Air France thus had a second day of strike on Friday to obtain a general increase of 6%.

Smic increased by 1.24% since January 1st

"Growth is starting again, but who benefits from growth? Money does not run, it flows on all sides except for employees. The mobilization on wages is starting again, it is new, and we will contribute, "CGT Secretary General Philippe Martinez said earlier this week. Because of "reforms that have taken place for thirty years", "the development of fixed-term contracts, temporary work, part-time work, odd jobs, which goes hand-in-hand with reductions in social contributions", have also an impact, explains Mr. Ducoudré. "The precarious odd jobs are generally less well paid. And when you are part-time or on a fixed-term contract, you are not going to negotiate wage increases, "he says. So, over the years and reforms, bargaining power has eroded, "he adds. This goes hand in hand with a "decrease in union representation".

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When asked about wage demands, Minister Muriel Pénicaud explained that this was a matter of "bargaining in companies". "There is a balance to be struck between general increases, which mainly concern low wages, individual performance that can affect all levels but also collective performance," she added. In recent years, the tendency has been towards individualization rather than general increases. The "Pact" law passed by the Minister of the Economy, Bruno Le Maire, targets employee profit sharing and participation, particularly in companies with fewer than 50 employees.

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As for the Smic, it rose 1.24% on January 1, according to the formula of automatic revaluation, without help. Addressed in the report of the group of experts made public before Christmas, the deindexing of the minimum wage - currently indexed to inflation and the gross hourly wage of workers and employees - is an idea abandoned by the government for the moment.


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