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“It is neither by degrading competitiveness nor by going into more debt that purchasing power will improve”

“In France, we don’t have oil, but we have ideas! The older among us remember that advertising slogan from 1974, when the then government wanted to encourage energy saving to overcome the first oil shock. Today, we still have no oil, but we have a plethora of “candidates for purchasing power”.

In this presidential campaign, everyone is trying to improvise themselves as creators of wealth in an attempt to relieve the wallets of the French, who are suffering the effects of soaring prices for energy and basic necessities.

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As the last straight line before the election looms, voters should realize that the ability of a President of the Republic to improve purchasing power remains, after all, limited.

Obviously, when more than one in two French people cite this subject as being their main concern, it is electorally impossible to ignore. At this stage, the programs fall into two categories. The left opts for a spectacular increase in the minimum wage. The right for a reduction in social charges. One is unrealistic, the other amounts purely and simply to a fool’s game.

Counterintuitive effects

Concerning the first option, let us first note that France is one of the countries where the minimum wage corrected for differences in price levels and working hours is the highest. Then, the group of experts on the minimum wage, which is responsible for drawing up recommendations for the government, recalls that a “a rise in wages greater than productivity gains increases the production costs of companies, which must reduce employment, or increase their selling prices and, consequently, lose price competitiveness, or even reduce their margins, which penalizes their ability to invest and innovate. »

Clearly, the effects of a strong revaluation of the minimum wage would only be a flash in the pan which could even have counter-intuitive effects on purchasing power. To this is added a phenomenon of crushing of the salary hierarchy to the detriment of more qualified jobs. As a reminder, France is one of the nations in which the gap between the minimum wage and the median salary is the weakest.

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The other option is to remove part of the social contributions to increase the net salary. The process is not new, but the candidates are creatively onslaught to bring it up to date.

The candidate of the Les Républicains party Valérie Pécresse wants, for example, to lower old-age contributions by 2.4% to increase net salaries by 3%. Far-right polemicist Eric Zemmour wants to reduce the rate of general social contribution (CSG) by nearly seven points for salaries up to 2,000 euros. Finally, Marine Le Pen, who wears the colors of the National Rally, plans to exempt companies from employer contributions on the 10% increase they would grant to all their employees who earn up to three times the minimum wage.

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