how much can you negotiate against 6% inflation?

Last year, you thought you had negotiated well? A 3% increase was enough to beat inflation… As the year 2023 approaches, inflation is hovering above 6% before a probable peak in early 2023. Should we base ourselves on these figures to negotiate?

Negotiating a raise is always an individual matter. Depending on your projects, the job market, your workload, your role in the company, etc. But in this period when France is facing high inflation for the first time since the 1980s, the question also arises collectively: should you claim at least that your salary follows the price increase? And if so, which one? The 5.2% inflation estimated by INSEE for the year 2022 (compared to 2021)? The 6.2% estimated for November 2022 compared to November 2021? Or the more than 7% predicted (1) for January or February 2023, is it the fault of the planned evolution of the tariff shield? The point in 3 questions.

1 – How much do companies plan to grant?

4%. About. This percentage emerges from all the recent studies on salary increases for 2023 and on annual negotiations. For 2023, companies forecast an average increase of 4%, which is 0.5 percentage points more than the actual increase granted in 2022 [3,5%, et 2,3% en 2021, NDLR], announces WTW, which conducted a study of 627 French companies. 4.05% according to People Base CBM’s annual compensation survey, which is based on individual data from 644 companies. And even 4.3% or even a little more according to the Inflation-salary survey 2022-2023 of the HR consulting firm Alixio. Mrs the European Commission estimates 4.5% the increase in the average salary in France in its 2023 economic forecast.

An estimated +3.5% salary increases without job changes

We anticipate an overall increase of around 4% in 2023, confirms Franck Chron, HR consulting specialist and Deloitte partner, who measures the overall evolution of increase budgets. It is indeed an increase in payroll. In detail, we estimate +3.5% salary increases [sans volution de poste]and +0.5% increases in compensation due to job changes.

2 – Executive or not, close to minimum wage, SME… Who will be increased the most in 2023?

Companies giving no raise in 2023? They exist but they are extremely rare. 99% of the companies studied by the firm People Base CBM will at least proceed with individual increases, for more than half of their employees. And almost 58% of companies will pay a general increase to their employeesan overall increase of 2.99%, compared to just under 42% for companies inclined to increase overall last year or 31% in 2019.

The salaries of non-executives should increase more than those of executives

Who will benefit the most? The salaries of non-executives should increase more than those of executives, says Franck Chron, acknowledging that this forecast is unusual. First explanation: a catching up on low wages, hardest hit by the erosion of purchasing power than the others, in the face of inflation, as recalled by the national secretary of the CFDT Luc Mathieu. Second explanation: the three automatic rises in the minimum wage which marked 2022, for an overall increase of 5.6%. However 12% of the salaried population is at the minimum wage, supports Luc Mathieu. And the progression of the Smic pushes by ricochet the companies to increase the low wages, located between the Smic and the median salary, currently situated 2005 euros net.

Even the non-profit sector is planning increases

Last sign that the annual negotiations of this end of 2022 and the beginning of 2023 will be surprising: Franck Chron, of Deloitte, underlines that even the non-profit sector [associatif, ESS, etc.] provides for increases, on average of 2%, which is unusual. A phenomenon that therefore goes beyond the framework of the driving sectors alone (energy, finance, pharmaceuticals, etc.). The increases indeed concern all salaries: it is indeed much more general than usualrecognizes Franck Chron.

In other words, whatever your position or your sector of activity, the question of a salary increase is therefore not taboo this year. It concerns all salaries.

3 – Should we aim for 4% average increase or 6% inflation?

Your boss announces a 5% increase to you: should you consider yourself lucky, since you are doing better than the average… or loser in the face of inflation which will soon break the 7% bar? The national secretary of the CFDT does not hesitate for a second: That wage negotiations result in increases is obviously satisfactory… but beware: when inflation is deducted, net purchasing power will decline! And it’s a novelty, a first for about 40 years! Implied: asking for 7% is not indecent this year.

Net purchasing power will decline! This is a first for 40 years!

With inflation, we are in a logic of instantaneousnuance Franck Chron, human resources specialist at Deloitte. If it had ever reached 15%, companies could not have followed. Comparing salary increases to inflation makes sense…but you have to take a step back. Franck Chron recalls the overall wage increase of 2.5% made in 2022, and adds: We must not forget the gain in purchasing power of the last 15 years: about 14% in 15 years, so almost 1% per year.

The argument of the instantaneousness of inflation is also found in the latest economic forecasts from La Banque Postale, which is working on the risk so feared by Bercy of a price-wage spiral in France: inflation will decline but remain very high in 2023, driven in particular by the rise in wages, forecasts La Banque Postale, before a sharp deceleration in wages (+2.6%) in 2024 and a stabilization of price increases between 2% and 4% according to the various scenarios envisaged.

Today, there is no inflation-wage loop

Today, there is no inflation-salary loop, annoys trade unionist Luc Mathieu. This would be the case if wages rose faster than priceswhich may have happened during the 1970s. This is not the case today! Luc Mathieu also points out that the planned 15% increases in gas and electricity prices at the start of 2023 will not only push inflation temporarily above 7% (1) but also mechanically trigger a new automatic rise in the minimum wage at the end of the 1st quarter of 2023, despite the announced increase of 1.8% on 1 January. At this rate, the minimum wage will quickly approach the median wage.

Interactive tool: How many employees earn more or less than you?

(1) OECD forecast for the 1st quarter of 2023.