The project is on Michel Barnier’s desk. Gabriel Attal left the new Prime Minister, who has made purchasing power one of his priorities, a proposal to “de-micardize” France, by reviewing the system of exemptions from social security contributions.
This is a “structural overhaul” of these exemptions which currently concern salaries up to 3.5 times the minimum wage, a Matignon advisor told AFP, confirming information from Echoes.
These exemptions, maximum at the minimum wage level, introduced to support employment, are today accused by some economists of slowing down wage growth by creating “low wage traps”. Today, the system is made up of a stack of three measures: a general reduction in contributions, strongly degressive up to 1.6 times the minimum wage, a reduction of 6 percentage points in health contributions (the “health band”) up to 2.5 times the minimum wage and a reduction of 1.8 points on family contributions (“family band”).
A “degressive” system
The path chosen by the outgoing Prime Minister, based on a report given to him by economists Antoine Bozio and Etienne Wasmer, is to “recreate a system with a single reduction” and no longer these three measures. It would be “degressive”, which would avoid threshold effects and would stop “at three minimum wages” (instead of 3.5 currently).
Today, increasing the net salary of an employee paid 2,000 euros gross by 100 euros costs the employer nearly 500 euros. In the new system, the total cost to the company would be more like 350 euros.
Last year, MPs Jérôme Guedj (PS) and Marc Ferracci (Renaissance) proposed removing the exemption for salaries above 2.5 times the minimum wage, but this option was not retained because it would have been penalizing for industry and foreign trade, according to the advisor to the outgoing executive. In the retained proposal, while removing the reductions between 3 and 3.5 times the minimum wage, “employers are winners” for salaries below 3 times the minimum wage, because “this increases the mass of reductions at this level”, the same source specifies.
The option, if retained by the Barnier government, would not represent an additional cost for public finances in 2025, the overall volume of exemptions from employer contributions remaining around 80 billion euros. It could be integrated into the next draft social security finance bill (PLFSS).