Informations Rapides · 8 October 2021

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 - second quarter 2021

In the second quarter of 2021, the payroll and the number of hours paid by employers increased moderately compared to the previous quarter, in line with the revival of activity. While the beginning of the quarter was marked by the continuation of health-related restrictions in April, there followed a gradual easing of restrictions in May and again in June (reduced curfew, reopening of cafés and restaurants, etc.). This resulted in a revival of activity, particularly in the sectors that were sharply affected by the health crisis, such as accommodation and food service activities.

In the previous five quarters, the payroll and the number of hours paid by employers had varied considerably, due to health crisis and an extensive use of short-time working compensation. This measure led to the substitution of compensation, which is not considered as wages, for part of the wages. Short-time working compensation requests can be done with some months of delay. Since the health crisis emergence, estimations are more likely than usual to be revised, especially in sectors with an extensive use of short-time working.

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 June 2020, the legal indemnity remained fixed at 70% of the gross wage, but, with a few exceptions, the government only covers 60% (and even 52% from June 2021). 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 2020 is included in the labour cost.

In addition, various labour cost reduction measures are taken into account in the labour cost index and contribute to its variations until the second quarter of 2021.

First, the special bonus for purchasing power passed by French Parliament in late December 2018 has been renewed in 2020 and 2021 : 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 from 2020 to 2022 and has raised the threshold to 2,000€ for firms having signed a profit-sharing deal.

Next, the plan to support the tourism sector decided on May 2020 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 (list extended in October 2020). These measures are taken into account in the total labour cost index, amounting to 2.4 billion euros over the year 2020 and almost 950 million euros for the first two quarters of 2021.

Last, the “1 young person 1 solution” plan, launched at the end of July 2020 and extended until June 2022, 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.

All of these labor 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).