Negotiated wage dynamics

As in many European countries, wage dynamics in France are influenced by collective bargaining institutions. At the national level, the SMIC or national minimum wage (NMW) is set by the government according to a specific formula that indexes it to inflation and to past real wage growth; the NMW applies to all workers. 

At the industry level (but sometimes also at the local level), trade unions and employers' federations sign branch agreements which define minimum wages for different representative jobs in their branch. Wage agreements can also be signed at the individual firm level, usually for general or individual wage increases.

The negotiated wage indicator published by the Banque de France tracks changes in negotiated wages in branch-level collective agreements covering a vast majority of private sector employees. Each branch defines a classification of representative jobs and sets a minimum wage for each one. Compulsory talks are then held each year to renegotiate this minimum wage grid, leading potentially to a new wage agreement between trade unions and employers’ federations.

The French Labour Laws enacted in 2017 stipulate that branch-level minimum wage agreements have primacy over firm-level agreements: in other words, firms covered by a branch-level agreement may not pay a worker less than the minimum wage agreed by the industry branch for that specific job category (or less than the NMW). The Ministry of Labour generally extends branch-level agreements to all firms belonging to that industry.

The quarterly indicator published by the Banque de France is the average increase over a year calculated using the wage grids defined each year in over 350 branches. The indicator has been available since 2006 and is updated every quarter according to the methodology described below.
 

For an analysis of negotiated wage rises at the start and end of 2022 go to Eco Notepad.