Report
Patrick Artus

France: How can low wages be increased without destroying jobs?

As opposed to the OECD as a whole, income distribution is not skewed against employees in France and the level of the minimum wage is not abnormally low. In addition, low-skilled employment is very sensitive to the cost of low-skilled labour. Yet there is clearly very significant demand for an increase in low wages; how can it be met without destroying jobs? We see only two possibilities in companies (low wages in the public sector, for example in hospitals, can be corrected by the government): Either using public transfer payments to low-wage earners (a negative tax, called the "activity bonus" in France) and financed by taxes. This is actually an even stronger redistributive policy that will reach a limit and, moreover, this is government aid, not a wage; Or accepting price increases in sectors that use unskilled employment (personal services, retail, unsophisticated business services) that can offset the increase in low wages. This would require households to accept higher prices of certain goods and services, and companies that use services to accept lower profit margins.
Provider
Natixis
Natixis

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Analysts
Patrick Artus

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