How inflation affects the problem of low wages

How inflation affects the problem of low wages

45-year-old Alexander Kornyu perfectly remembers his beginnings as a security guard. He was hired on September 19, 2000. Paid about 7000 francs! Yes, at that time it was still francs! », he smiles behind thin glasses, one of which is cracked. It was minimum wage at the time. Alexander was then on the first level of the salary network. “I thought I would have a good evolution in this job, I was wrong”, – he blurts out bitterly. Today, the firefighter-rescuer of one of the defense towers rose in rank by two steps. But after twenty-two years of experience, he again receives the minimum wage: “caught up” for the minimum wage, he says, which is rising faster than his salary.

This is one of the side effects of inflation, according to the latest INSEE estimate, in France at 5.6% for the year in September after 5.9% in August and even 6.1% in July. Since its inception in 1950, the minimum wage has been indexed to the consumer price index and increases when the latter does the same. In a “normal” year, there is only one revision, the 1ste January. But from 2021, four are known: in 1e October 2021 to 1e January 2022 to 1e may and again 1e August, that is a total of +7.76% for the year, which is 98.45 euros net more per month. The minimum wage is now €11.07 gross per hour, or €1,678.95 gross per month.

Read also: The article is reserved for our subscribers “In inflationary conditions, those barely above find themselves caught up, even overtaken, by the minimum wage, creating a sense of inferiority.”

However, 7.76% is still more than inflation for a year. Because the minimum interprofessional wage is indexed not only to the consumer price index, but also partly to an increase in the average daily wage of workers and employees. Moreover, its level underlies the entire architecture of low wages in France.

The choice was made to prevent the minimum wage from falling, as was the case with its ancestor, the smig (guaranteed inter-occupational minimum wage) between 1951 and 1967. Then it developed much less quickly than the average French salary, caused by growth and increased productivity. Since 1982, the level of the minimum wage has stabilized between 58% and 63% of the average wage. Apart from this automatic increase, there has been only one additional “boost” since 2007, after the election of François Hollande. We have since been fully satisfied with the legal reassessment. More profitable in times of inflation.

For 2022, the latest figures available from the Department of Labor’s Office of Animation Research, Research and Statistics show that basic hourly wages for workers and white-collar workers increased by 3.5% in one year at the end of June, and basic monthly wages for all workers by 3.1%. “Because the minimum wage is indexed to prices, not the rest of wages, and because they are not yet rising at the same rate, we are seeing a narrowing of the gap between the minimum wage and the rest of wages. .emphasizes Jérôme Gauthier, professor of economics at Paris-I-Panthéon-Sorbonne. This creates the phenomenon of wage equalization at the bottom of the hierarchy, both in the private and public sectors. »

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