Informations Rapides · 19 March 2024 · n° 63

In Q4 2023, hourly wages increased by 3.1% over a year, hourly costs by 3.4% Labour cost index (LCI) - Detailed results - fourth quarter 2023

In the fourth quarter of 2023, the wage bill paid by employers in the non-agricultural market sector (excluding services to households) increased significantly more than the number of hours paid by employers, so that hourly wages increased again. This increase was the result of the inflation being taken into account in wage negotiations. The profile of wage growth was also marked by the Value Sharing Premium (PPV) for which payments have been massive at the end of 2023: €2.3 billion were paid to employees, much more than in the previous quarter (€540 million) but less than in the fourth quarter of 2022 (€3.3 billion). This scheme, which replaced the special bonus for purchasing power, allows firms to pay, between July 2022 and December 2023, 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 aid for hiring a young worker with a sandwich course contract, launched at the end of July 2020, contributed to labour cost variations until the fourth quarter of 2023. From January 2023, employers are eligible, under certain conditions, for aid of up to €6,000.

In the fourth quarter of 2023, hourly wages growth in the non-agricultural market sector (excluding services to households) strengthened, reaching +0.9%, after +0.6% in the previous quarter (seasonally and trading day adjusted data). This acceleration over the quarter is driven by PPV payments, higher at the end of the year.

However, hourly wages slowed sharply over the year: +3.1% in the fourth quarter of 2023, after +4.1% in the previous quarter. This slowdown can be explained by a decline in inflation and lower PPV payments at the end of 2023 compared to the end of 2022. Hourly wages were slightly higher in industry (+3.2%) and services (+3.1%) than in construction (+2.9%).

In the fourth quarter of 2023, hourly labour costs in the non-agricultural market sector (excluding household services) accelerated, driven by hourly wages: +0.7% over the quarter, after +0.4% in the previous quarter.

Over a year, hourly labour costs slowed: +3.4% in the fourth quarter of 2023, after +4.1% in the previous quarter. The difference in annual growth with the hourly wages in the fourth quarter of 2023 is mainly due to the PPV, which is not subject to social security contributions: the year-on-year fall in bonus payments has had a greater impact on year-on-year wage growth than on labour cost growth. This difference, observed for most sectors, was much more marked in the sector of electricity, gas, steam and air conditioning supply, where payments have fallen particularly sharply compared to the end of 2022.

Compared to the flash estimate published on 16 February 2024, the year-on-year changes in LCI - hourly wages and LCI - hourly costs in the non-agricultural market sector (excluding household services) in the fourth quarter of 2023 have both been revised downwards by 0.1 points.

Compared to the previous publication of detailed results on 15 December 2023, the year-on-year changes in LCI - hourly wages and LCI - hourly costs in the non-agricultural market sector (excluding household services) in the third quarter of 2023 have both been revised downwards by 0.1 points.

Since 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 INSEE website. 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).