Employers united against a possible freeze on payroll tax relief for low wages

Employers' organizations are requesting a meeting with the government

The Medef, CPME, and U2P, joined by the FNSEA and Udes, wrote to the Prime Minister on Friday, May 15, requesting the continuation of employer social security contribution reductions linked to low wages. The five organizations also wish to meet with Sébastien Lecornu to discuss the matter.

This move comes in an economic context deemed worrying by employers' representatives. The government is preparing a six billion euro savings plan intended to offset the additional costs linked to the war in the Middle East and the increase in public spending.

Minimum wage increase on June 1st: what are the consequences for businesses?

The minimum wage (SMIC) will increase by 2,4% on June 1st to reflect inflation, which has now exceeded 2% year-on-year. This increase is primarily driven by rising energy prices linked to geopolitical tensions in the Middle East.

This increase will automatically lead to a rise in employer social security contributions on low wages. However, employers' organizations fear that the government will decide to freeze current exemptions in order to limit public spending.

According to them, such a measure would amount to increasing the cost of labor for French companies in a period already marked by an economic slowdown.

An economic context deemed worrying by employers

In their letter, the employers' representatives point out that after a first quarter marked by zero growth, several economic indicators are deteriorating:

• economic activity declined in April;
• a declining investment;
• an unemployment rate reaching 8,1%, its highest level in five years.

The signatories believe that a further increase in the cost of labor could further weaken the French economy.

"In this context, increasing the cost of labor would further weaken the conditions for growth, sovereignty and employment. Restoring public finances is a necessity, but it cannot be done by attacking work, production, and value creation," the five presidents wrote.

Companies fear a "double whammy"

Employers' organizations also denounce the risk of "a double penalty" for companies, which they believe would have to deal with the following simultaneously:

• higher salaries;
• Employer contributions are on the rise.

They believe that businesses should not become a budgetary adjustment variable and warn of the possible consequences for employment and competitiveness.

One year before the presidential election, representatives of employers also mention "the very negative perception that business leaders would have" in the face of "a further increase in the cost of labor".

A topic already discussed at Bercy in early May

The subject had already been raised at a business council meeting held at Bercy on May 7. The Medef, the CPME and the U2P had then published a joint statement also signed by the AFEP, representing very large French companies.

Meti, an organization representing medium-sized businesses, had also expressed its opposition to a possible freeze on employer contribution relief.

Illustrative image of the article via Depositphotos.com.