On the eve of demonstrations planned in France for salary increases and a few days before a “social conference” chaired by Prime Minister Elisabeth Borne, Rexecode has done the accounts. Unsurprisingly, the French lost purchasing power between 2019 and mid-2023. But the Parisian research institute cuts short two preconceived ideas by demonstrating that low wages have not been the most harmed and that, in general, the sharing of value has not evolved to the detriment of employees. . Explanations with Olivier Redoulès, director of studies at Rexecode.
L’Express: You have noticed a drop in the purchasing power of the French since 2019. Which categories have been penalized the most?
Olivier Redoulès: There is indeed a loss of purchasing power, on average, of 1.5 points in the second quarter of 2023 compared to 2019, for employees in non-agricultural sectors. Basic monthly salaries, those which appear on pay slips, change less quickly than inflation. Due to the nature of the shock, which comes from imported inflation, wages adjust with a delay. But low earners are not the losers. Presumably, in addition to the revaluation of the minimum wage, this is explained by the fact that companies wanted to preserve the purchasing power of these employees and retain their workforce in a context of tension on the labor market. Managers share the remaining base and their purchasing power fell by 2.9 points, compared to a drop of 0.4 points for workers and employees. But we prefer to think on the basis of the average salary per capita, which includes all the components of employee compensation, including profit-sharing, bonuses, etc.
On this basis, has value sharing become less favorable to employees since 2019?
No, in reality, the share of wages in value added increased slightly, by 0.3 points. In transport equipment and construction, sectors which have chosen to maintain staff numbers and preserve wages, the movement has been favorable to employees. In the hotel and catering industry too, faced with recruitment tensions and changes in business models. In the energy, water and waste sector, the effect of the increase in energy prices was such that the entire increase in margins was not passed on to employees, far from it. This illustrates that the sharing of value took place, within the limits of the constraints specific to each sector, but not necessarily to the detriment of employees.
Do you believe that the loss of purchasing power will continue, to what extent?
We explain most of the decline in purchasing power by changes in productivity. However, hourly productivity has fallen by 5% since 2019. The first reason is the increase in the number of apprentices, who represented a third of job creations. Let us add that job creation has tended to take place in sectors whose productivity is below average, so there is an effect of intersectoral composition. Finally, with the decline in unemployment, less qualified or less experienced, and therefore less productive, profiles have entered the labor market. All these factors explain around 80% of the decline in productivity. This is good news: it is not the employees who have become less productive but it is the labor market which has changed. These structural effects are found in wages. For the remaining point of loss of productivity, several elements of explanation, for some of a temporary nature such as EDF’s technical problems or supply difficulties in certain sectors, and for others linked to a more lasting transformation of conditions of production.
For example in construction: as much as new construction is a fairly standardized process, renovation, now encouraged with a view to environmental transition, is more labor intensive. In the automobile industry, the change in the production chain linked to electrification can have a negative effect on productivity in the short term.
Value sharing works. Catch-ups happen naturally. The government’s idea of pushing companies to increase the purchasing power of employees may be counterproductive. We must not take the risk of threatening our competitiveness. Let’s trust the price signal: employees will move towards the most profitable companies.