10 July 2020

2020

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 - first quarter 2020

- In a context of economic recession due to the health crisis and the implementation of the lockdown from Mid-March, wage bill and total hours worked decreased sharply in Q1 2020. These drops are essentially the result of the strong increase in the use of short-time working, for which the system has been strengthened by the government: the legal compensation due to employees is now fully refunded by the state for all employees (up to 70% of gross wage within the limit of 4.5 times the minimal wage). The labour cost indices measuring only the cost of one worked hour supported by employers, the hours compensated for short-time working and the corresponding compensation paid to the employees are not taken into account. The ICHTrev-TS being an index smoothed on four quarters, the impact of the recession in Q1 2020 alone will be spread over the whole year 2020.

- The series of hours worked per job produced by Dares (Statistical service of the Ministry of Labour) and usually used for the calculation of labour cost indices has been suspended in Q1 2020, due to the replacement of the Acemo quarterly survey by a flash survey on activity and employment conditions of the workforce specific to the health crisis (Acemo-Covid). Thus, the hours per job used to calculate the Q1 2020 variations of the indices come from a new source used for this purpose: the nominative social declaration (DSN).

- The special bonus for purchasing power passed by French Parliament in late December 2018 has been renewed in 2020: the original system planned that only firms having signed a profit-sharing deal could pay up to 1’000€ free of any tax, to employees whose wage was lower than 3 times the minimal wage. With the health crisis, the government has allowed all firms to pay this bonus and has raised the threshold to 2’000€ for firms having signed a profit-sharing deal.

- As of 1st October 2019, the employers’ contribution general exemption, consisting in lowering the employers’ social contributions for wages lower than 1.6 times the minimal wage has been extended to the unemployment insurance contribution (with a rate of 4.05%). Thus, the amount of exemptions under this measure increased by 900 million euros in Q4 2019, lowering by 0.5 points the total labour cost index. The ICHTrev-TS being an index smoothed on four quarters, the impact of this measure on the ICHTrev-TS is spread from Q4 2019 to Q3 2020.

On 1st January 2019, the tax credit for encouraging competitiveness and jobs (CICE) was transformed into a permanent reduction of employer contributions. The ICHTrev-TS being smoothed on four quarters, the indices published in this Informations Rapides, taken into account the CICE, and the “without CICE” indices, which have been published so far in supplementary data, converged in December 2019. As a result, the “without CICE” indices are no longer published from this publication onwards. For further details, see the complementary methodological note.