Informations Rapides · 15 December 2023 · n° 313

In Q3 2023, hourly wages and hourly costs increased by 4.2% over a year Labour cost index (LCI) - Detailed results - third quarter 2023

In the third quarter of 2023, the wage bill increased significantly more than the number of hours paid by employers, so that hourly wages increased. This increase was the result of the inflation being taken into account in wage negotiations. Minimum wage increases also affected wage growth; in the third quarter of 2023 there was no automatic increase in the Smic in line with inflation, as had been the case in the previous two quarters (+2.22% in May, after +1.81% in January). The profile of wages was also marked by the Value Sharing Premium (PPV) for which payments decreased again in the third quarter of 2023: €540 million were paid to employees in the non-agricultural market sector excluding household services, after €670 million in the second quarter of 2023 and €610 million in the third quarter of 2022. Since July 2022, this scheme has allowed firms to pay up to €3,000 of bonuses per calendar year and per employee (and even €6,000 in the case of a profit-sharing agreement), free of social security contributions and income tax.

In addition, the “1 young person, 1 solution” plan, launched at the end of July 2020, contributed to labour cost variations until the third quarter of 2023. As part of this plan, employers are eligible for aid to hire a young worker with a sandwich course contract, under certain conditions and capped at €6,000 per year since January 2023.

In the third quarter of 2023, hourly wages in the non-agricultural market sector (excluding household services) increased by 0.6% over the quarter, after +0.5% in the previous quarter (seasonally and trading day adjusted data).

Year-on-year, hourly wages slowed down: +4.2% in the third quarter of 2023, after +5.0% in the previous quarter. This slowdown can be explained in part by the fact that there was no automatic revaluation of the minimum wage and by lower PPV payments. Hourly wages were slightly more dynamic in industry (+4.4%) than in services (+4.1%) and construction (+3.7%).

In the third quarter of 2023, hourly labour costs in the non-agricultural market sector (excluding household services) slowed slightly: +0.4% over the quarter, after +0.6% in the previous quarter.

Year-on-year, hourly labour costs also slowed: +4.2% in the third quarter of 2023, after +4.6% in the previous quarter. In most sectors, hourly labour costs in the third quarter of 2023 showed a year-on-year change close to that of hourly wages, unlike in the previous quarter, which was marked by a year-on-year increase in PPV payments, which are not subject to social security contributions.

Compared with the flash estimate published on 16 November 2023, the year-on-year change in LCI – hourly wages in the non-agricultural market sectors for the third quarter of 2023 is unchanged, while the year-on-year change in LCI – hourly costs has been revised upwards by 0.2 points. This revision is the result of the integration of information known since then on social contributions.

Compared with the previous publication of detailed results on 15 September 2023, the year-on-year changes in LCI – hourly wages and LCI – hourly costs for the second quarter of 2023 have both been revised upwards by 0.1 points.

As of December 2023, this publication, dedicated to the detailed results of the Labour Cost Index (LCI), also includes the results of the revised hourly labour cost index – All employees (ICHTrev-TS), via an downloadable supplementary data file from the web publication. The times series of the ICHTrev-TS remain available on the website Insee.fr. The ICHTrev-TS is therefore now available approximately 75 days after the end of each quarter, rather than 100 days after.

The ICHTrev-TS is primarily intended for users who need indicators of labour costs to upgrade their contracts. Therefore, this index (base 100 in December 2008) is not usually subject to any revision once it has been published. It is computed, every quarter, on the basis of data from the detailed results of the LCI then smoothed and made monthly to ensure less volatility. The choice of an index for the purpose of indexing a contract or the appropriateness of temporarily deviating from the indexation rule provided for in a contract is at the discretion of the contractors.

The ICHTrev-TS comprises a cost index and an employer contributions index. The latter measures changes 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. Unlike the cost index, the employer contributions index is not made monthly (the three monthly values for the same quarter are identical).