Informations Rapides · 9 April 2021 · n° 094

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 - fourth quarter 2020

In a context of economic recession, related to the health crisis, 2020 was impacted by unprecedented variations of payroll and hours paid by employers. These variables decreased sharply in the first half-year, especially during the lockdown period from 17 March to 10 May 10, 2020, before rebounding sharply in the third quarter. During the fourth quarter, given the curfew and the second lockdown from 30 October to 15 December, paid hours and payroll decreased but in a more limited way than in the second quarter.

These strong variations were mainly due to an extensive use of short-time working compensation during the first lockdown, which sharply shrunk during summer before rising again during the second lockdown in the autumn. Indeed, this system leads to substitute compensation (not considered as wages) for part of the payroll.

The short-time working system existed before the health crisis but the government strengthened it when this crisis emerged: from March to May 2020, the government fully refunded the legal compensation (70% of gross wage within the limit of 4.5 times the minimal wage). From the 1st June, the legal indemnity remained fixed at 70% of the gross wage, but, with a few exceptions, the government only covers 60%. The labour cost indices measuring only the cost supported by employers for the employment of their employees, the hours compensated for short-time working and the corresponding compensations paid to the employees are not taken into account. On the other hand, the portion of short-time working allowance not covered by the government as of June is included in the labour cost.

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 the first semester 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, since the publication of Q1 2020, the hours used have come from a new source used for this goal: the nominative social declaration (DSN), covering paid hours (excluding short-time working).

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.

Announced by the government on 14 May 2020, the plan to support the tourism sector provides for exemptions from employers’ social security contributions and assistance with the payment of contributions for the firms with fewer than 250 employees in some sectors (especially concentrated in trade, accommodation and food services and administrative and support service activities). These measures are taken into account in the total labour cost index, amounting to 2.4 billion euros over 2020 evaluated from firms’ declarations.

The “1 young person 1 solution” plan, launched at the end of July 2020, provides under certain conditions for a premium, up to 4,000€, to the employers hiring a young worker under 26 years of age. It also provides for an exceptional assistance when hiring a young worker with a sandwich course contract, up to 8,000€ if the worker is older than 18 years old and up to 5,000€ otherwise. These labour cost reduction measures are taken into account in the ICHTrev-TS.

The ICHTrev-TS is primarily intended for users who need indicators of labour costs to upgrade their contracts. Therefore, this index is not usually subject to any revision once it has been published (however one exception was made in 2020, see Warning). It is a monthly index (base 100 in December 2008) that is published every quarter for all industries.

The index of employer contributions has been published since April 2010 (base 100 in December 2008). It differs from the ICHTrev-TS in two ways: the three monthly indices of a same quarter are identical and there is no forecast for the mechanical and electrical industries as far as the first month of the next quarter is concerned. This index of employer contributions measures the change in the variable “1 + rate of employer contributions” where the rate of employer contributions is the percentage of employer social contributions and taxes minus subsidies based on wages and employment, relative to gross salary (see methodological note).