Lecornu announces €24 monthly rise in minimum wage and tax breaks for firms
The French Prime Minister has announced an early increase in the minimum wage from 1 December. The government also plans tax measures for businesses and wants to launch a new round of sectoral pay negotiations.
Prime Minister Sébastien Lecornu addressed social discontent and employer concerns at a conference on Monday, unveiling a series of measures to boost purchasing power and encourage wage hikes. The key announcement involved raising the minimum wage by 1.6% from December 1st, boosting net monthly pay to around 1,502 euros—an increase of 24 euros compared to the previous January 1st target. This rise represents the second-largest increase in the past twenty years, according to the Prime Minister.
Lecornu emphasized that raising the minimum wage was only the beginning, as it would trigger discussions on pay increases across various sectors. The government also unveiled plans for a reform project to reduce social security contributions, aiming to increase net salaries. While questioned about the government's perceived delay in responding to public anger, Lecornu defended his approach, stating that he believes in announcing tangible measures rather than merely making headlines.
To ease businesses' worries about rising labor costs, the government will implement several tax measures concurrently: a tax exemption for overtime up to 10,000 euros, relief for employers' contributions to public transport costs, and tax-free value-sharing bonuses. These value-sharing bonuses, akin to the "Macron bonus," allow companies to distribute a portion of their value creation to employees with favorable tax and social security treatment.
The government aims to act as the guarantor of mutual commitments between employees and employers, with ongoing negotiations set to continue across nearly a hundred professional sectors.
However, trade unions expressed reservations about the current announcements. The minimum wage increase of 1.6% fell short of their demands, with the CFDT urging an additional 100 euros net per month, and the CGT seeking around 150 euros. Even before Lecornu's announcements, the president of the CFTC, Cyril Chabanier, questioned whether the measures were sufficient to address the level of social discontent.
The CGT, led by its general secretary Sophie Binet, is planning another major strike and demonstration on November 17th.
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