Informations Rapides · 8 April 2022 · n° 93

The all employees-revised index of hourly labour cost - (ICHTrev-TS) Hourly labour cost index - fourth quarter 2021

In the fourth quarter of 2021, the payroll increased sharply compared to the previous quarter, and more than the number of hours paid by employers. These increases were part of the ongoing economic upturn, which has begun at the end of the spring when health-related restrictions have been lifted. Wage growth was also attributable to the resurgence of inflation at the end of the year and the 2.2% minimum wage increase on 1st October 2021.

From the first quarter of 2020, 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 it was strengthened when this crisis emerged: from March to May 2020, the legal compensation (70% of gross wage, being approximately 84% of net salary, within the limit of 4.5 times the minimal wage) was refunded at 100% by the government before this share was gradually reduced from June 2020. As of 1st July 2021, except in special situations (protected sectors or administratively closed establishments), short-time working compensation has been lowered to 60% of gross wage and its refund by the public authorities has been reduced to 60% (i.e. 36% of gross wage). The labour cost index 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 compensation not covered by the government as of June 2020 is included in the labour cost index.

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

First, the special bonus for purchasing power passed by French Parliament in late December 2018 and initially paid during the first quarter of 2019 has been renewed twice. The initially renewed 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, all firms were eventually allowed to pay this bonus, a first time in 2020 and a second time from 1st June 2021 to 31st March 2022, with a threshold raised 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.

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.

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 January 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).