Company value-sharing schemes should not replace wages, warns the CAE

“A strong substitution” of devices such as participation, profit-sharing or the bonus for sharing the value of wages implies that these mechanisms “benefit less to employees, since they lose in salary part of what they earn in sharing profits", explain in a note three economists from the CAE, an organization attached to Matignon.

Unlike participation, other mechanisms such as profit-sharing or the value-sharing bonus "seem to lead to significant substitution effects" with wages.

A form of zero-sum game which therefore leads to wage moderation and "no significant increase in the total compensation of employees".

Moreover, this substitution between wages and value-sharing mechanisms has "a significant cost for public finances" since these mechanisms benefit from tax advantages, note the economists.

When invested in value sharing, "a euro of profit, which would normally have been subject to corporation tax (at the rate of 25%), is now tax exempt and is taxed at a reduced rate deductions from wages (only the CSG-CRDS at the rate of 9,7%)".

"The reform considered in the bill" on the sharing of value recently adopted by the National Assembly "could lead to the transfer of between 350 and 500 million euros from profits to employees, at a total cost to public finances from 75 to 200 million euros", estimate the economists who also note "limited effects on employment and productivity".

At the end of June, the National Assembly adopted the bill on "value sharing" within companies, resulting from a union-employer agreement.

The text plans to extend the redistribution mechanisms to all companies with more than 11 employees, still lagging behind those of larger size.

According to the government, this extension to small businesses could concern 1,5 million employees within two to three years.

To "guarantee" the principle of non-substitution between salaries and alternative schemes, the deputy president of the CAE Camille Landais advocated Tuesday during a press conference a calculation formula "simple, transparent and directly backed by the profitability of the business".