10 January 2020

2020- n° 4

The all employees-revised index of hourly labour cost - (ICHTrev-TS); both a cost index and an index of employer contributions Hourly labour cost index - third quarter 2019

- On 1st January 2019, the tax credit for encouraging competitiveness and jobs (CICE) was transformed into a permanent reduction of employer contributions. In concrete terms, this leads up to removing the tax credit as such and in a 6-percentage-point reduction in the rate of the health insurance employer contribution for wages lower than 2.5 French minimum wage (SMIC) (rate cut and base equal to those applicable to CICE before its abolition). This transformation is almost neutral regarding the level and the evolution of labour costs as measured by the ICHTrev–TS as of the first quarter of 2019. However, this transformation lowers, ceteris paribus, the « without CICE » indices, which remain published until the convergence of the series without and including CICE. For further details, see the complementary methodological note.

- The emergency economic and social measures adopted by Parliament at the end of 2018 includes the opportunity for the firms to give an exceptional bonus for purchasing power on Q1 2019 to workers whose 2018 earnings were lower than thrice the minimal wage. This bonus, up to €1’000, exempted of income tax and all forms of social security contributions leads to an increase of the labour cost. The ICHTrev-TS being an index smoothed on four quarters and the measure only applying on the first one, the effect of the latter on the level of the index is spread over the whole year.

- Following the merger of the supplementary pension schemes AGIRC and ARRCO, the corresponding social contribution rates were modified on 1st January 2019. The impact of this measure on the evolution of the index is spread over the whole year.