France: A fall in the return on equity for shareholders in return for an increase in low wages and job creation?

France’s main social problems are well known: wages at the bottom of the distribution are low, even though the minimum wage is high relative to the median wage; the employment rate is abnormally low, which increases inequality ; and there is mass unemployment. For the time being, France relies on public policies and spending to try to correct these problems , involving, in particular: Public transfer payments to low-income earners (guaranteed minimum income, various housing subsidies*): approximately EUR 12 billion for the guaranteed minimum income and EUR 17 billion for housing subsidies; Income top-ups ( activity bonus ) for low- wage earners ( EUR 10 billion ) ; A back-to-school allowance (EUR 2.5 billion); Exemptions from employer social contributions on low wages ( EUR 25 billion ) . But these public mechanisms to support incomes and employment are reaching a limit in terms of their cost for public finances (nearly 3 percentage points of GDP for the benefits outlined above); further, the blanket replacement of companies in the payment of wages is not one of the role s of government. We can imagine another mechanism involving companies and not the government: companies c ould accept a fall in the return on equity for shareholders (RoE, 10% in 2019) either to increase the lowest wages or to create jobs for people locked out of the labour market. A 10% reduction in the RoE of French companies, which would be acceptable to shareholders, would generate 1.4 percentage points of GDP of additional resources, i.e. 5% of the corporate payroll, either to increase low wages or to finance job creation in activities that yield lower returns than those usually required . * Revenu de s olidarité active (g uaranteed minimum income ) Aide p ersonnalisée au l ogement (p ersonalised housing assistance ) Allocation de l ogement f amilial (f amily housing allowance ) Allocation de l ogement s ocial (s ocial housing allowance )