The rise in consumer prices was close to 5% in April… and it should exceed this threshold in May. However, apart from the Smic, few revaluations, the calculation of which is regulated, follow the frantic pace of inflation. When will automatic formulas kick in? The calendar.
Extension of the tariff shield on gas and electricity prices, rebate on fuel, tripling of the Macron bonus, abolition of the TV license fee… Here are some of the measures that the government intends to insert in a bill of amending finances, from the month of June. If the current majority LREM wins the legislative elections again, of course. This Wednesday, at the end of the Council of Ministers, the current government spokesman Gabriel Attal has a grain of other nudges that could integrate this package of rapid measures, including a dfreeze of the Civil Service index point (almost unchanged since 2010 apart from two slight increases under Hollande) or even a early revaluation of pensions and social benefits from July 2022 without waiting for the usual schedule. By definition, these promises remain hypothetical, since they are conditional on legislative elections and the debates of the new National Assembly.
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What is this famous usual schedule? Inflation, or more precisely the consumer price index (CPI), is 4.8% in April according to the first estimate of INSEE, which must be confirmed on Friday. The rise in prices should even flirt not far from 6% from June 2022.
Apart from a political boost, when should the soaring CPI have repercussions on pensions, wages, social benefits, but also on rents or various taxes?
Scheduled increases for 2022
July: unemployment benefits. It is on July 1 that Undic traditionally increases the minimum allowance and all unemployment insurance compensation. In July 2021, this increase concerning 2.4 million job seekers was limited to 0.6%. Impossible to guess in advance that of July 1, 2022: it goes through a vote of the administrators of Undic, that is to say the social partners managing the scheme (representatives of employers and employees). This revaluation takes inflation into account but its calculation is not an index. That is to say that it will not automatically progress at the same rate as the rise in prices.
August 2022: LEP and Livret A. There is a calculation formula… and it will apply for sure on August 1 next in view of the soaring inflation. If INSEE’s forecasts materialize, the Livret A should climb 1.5% and the Livret d’Epargne Populaire could jump 4.4%.
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October: housing allowances. The scale of personalized housing assistance is reassessed once a year. The last increase was clearly disadvantageous for beneficiaries: only 0.42% in October 2021. How can this lag with inflation be explained? Because the APLs are revalued on the basis of the rent reference index (IRL), which is itself calculated on the average inflation of the twelve previous months… In October 2022, the increase will be more marked. But will it keep up with inflation? Not sure. The October revaluation will be based on the IRL for the 2nd quarter of 2022, unknown at this time. A clue, however: the IRL for the 1st quarter is only 2.48%.
October: property tax. This is an increase that can already be anticipated. In 2022, the cadastral rental value, the basis for calculating the property tax, increases by 3.4%, by applying an inflation indicator. To this general increase will be added the potential increases voted by the departments or municipalities. As a reminder, the property tax will be due on October 15.
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November: supplementary retreat. Pensions are based on the one hand on the general scheme – for which the State can decide to anticipate an increase – and on additional schemes, which will in any case not be affected by an increase decided by the government. . When will the 13 million withdrawals receiving a supplementary retirement allowance from the private sector employee plan, Agirc-Arrco, see this pension increase? As of November 1. The last increase was only 1%. That of this year will necessarily be much larger. At the level of inflation? Almost… This annual revaluation certainly takes inflation into account, but the board of directors of Agirc-Arrco has a margin of 0.5 points compared to the forecast rate for the current year, which should flirt with the 4%.
A new automatic increase in the minimum wage in 2022?
Sometimes critical, the formula for calculating the minimum wage is however one of the few that provides for automatic activation in the event of a surge in inflation. To put it simply, when prices rise by more than 2% over a few months, the formula is automatically triggered and the minimum wage increases at the same rate. This is why it increased by 2.2% in October 2021, then more usually by 0.9% last January and finally by 2.65% on May 1. The net minimum wage thus rose in one year from 1,230.60 euros to 1,302.64 euros net, by strict application of the law, without any government assistance. These increases concern around 2 million salaries, or 12% of all salaries, according to the latest figures from Dares.
Could this automatic formula apply again in 2022? Difficult to say in the short term. Everything obviously depends on the acceleration (or deceleration) of inflation. The last value of inflation taken into accountfor the May 1 increase, is the March 2022 CPI for the poorest 20% of households (the 1st quintile). Very schematically, in the short term, inflation would have to be close to 7% in the coming months for the minimum wage to increase again mechanically.
These increases that will wait until 2023 (in theory)
January: salaries. Nothing prevents an employer from increasing its salaries without waiting for January 2023 and the traditional season of annual negotiations. In 2022, Deloitte estimates that the median increase is 2.35%, and 2.55% taking into account seniority and promotions. The level of inflation is the main reason for the budgets planned by companies for salary increases for the year 2022. Like the analyzes of the end of the year 2021, the negotiations at the end of 2022 for the 2023 increases should take this new situation into account.
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January: rents. It all depends on the lease, and the date scheduled for the annual review. January or anniversary date of signing the lease? If the rental contract indicates the month of January, the rent reference index (IRL) for the 3rd quarter of 2022 or that of the 4th quarter will most likely be close to the current level of inflation, around 4%.
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January 2023: basic retirement. The calculation is based on an average which clearly slows the increases. The latest increase is that of January 2022, of only 1.1%. Clearly out of step with inflation which was already hovering around 3%. The government intends to remedy this system following the legislative elections. If this is not the case, it will therefore be necessary to wait until January 1, 2023 for the pension from the general scheme to increase again. And this on the basis of an average of the CPI over 12 twelve months, from November 2021 to October 2022. This time, barring an anticipated boost by then, the regulatory revaluation would be significant, probably around 4% to 5% .
January: minimum old age. Here again, unless Emmanuel Macron’s promise to bring this minimum income to 1100 euros net, it would be necessary to wait until January 2023 to see the solidarity allowance for the elderly (ASPA), the counterpart of the RSA for seniors, progress. The formula is the same as for the basic pension and an automatic increase would therefore be similar.
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April: family allowances. The last automatic revaluation was only 1.8%. It applied to the allowances for the month of April 2022, those which have just been paid, at the beginning of May. This increase was well below inflation because of a calculation formula taking into account the average of the last twelve months, stopped in February. Barring a government boost, the next automatic increase – in a year’s time – will be much higher.
April: RSA and activity bonus. The National Family Allowance Fund (CAF) also pays the RSA and the activity bonus, which are progressing at the same rate, with an increase of 1.8% in April. We will therefore have to wait until April 2023 for the next increase…unless the next government, established following the legislative elections, decides to accelerate the pace.
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