Presidential 2022: An anthology of purchasing power proposals that aren’t always realistic

It was the flagship measure of her program, which was supposed to make her rise in the polls and take, who knows, the presidency of the republic. It’s not every day that millions of employees are given the opportunity to increase their purchasing power by 10%! Alas, Valerie Pekress (LR) had to revise her method a few weeks after it was launched. Because even if the state took over two-thirds of the debt, estimated at 25 billion euros, through the abolition of old-age contributions paid by employees, companies would also have to invest up to 8 billion in the boiler. Impossible, Medef said. Okay, the candidate replied.

And instead of mandatory participation of employers in this reassessment of the lowest wages (up to 2,800 euros net per month), Valerie Pekress now proposes that the state takes responsibility if companies fail to sufficiently increase the income of their employees. Challenge: Achieve 3% growth from summer 2022, then 2% growth in 2023, and finally 10% growth in five years.

Hello, it’s back! Did we expect unemployment, immigration, insecurity, global warming? Well, purchasing power ended up at the center of the presidential debate. According to a Sopra Steria poll taken at the end of January, 51% of French people put this topic at the top of their concerns, far ahead of everyone else. I must say that inflation, the existence of which we eventually forgot, also appeared a few months ago. Gasoline, electricity, manufactured goods, food, used cars, building materials… Everything is going up, and our compatriots have realized that the price waltz is probably just beginning.

For them, the awakening is all the more brutal because the past five years have been pretty good for their finances: According to a study by the Treasury Department, their end-of-the-month surge was twice as fast as in the previous five years. Removal of housing tax, replacement of part of social contributions with a less onerous one for KSG employees, Macron bonus after yellow vests, extension of the Youth Guarantee, reassessment of social minimums, increase in adult allowance (AAH), large increase in the activity bonus, not to mention the transformation of the ISF to the real estate wealth tax (IFI) and the limitation of capital income taxation…

We can say that Emmanuel Macron did not skimp. According to the IPP (Public Policy Institute), the generosity of the so-called “president of the rich” has benefited all French people. Or almost: only the most modest 5% did not participate in the celebration due to a slight dilution of the nuclear submarine and higher taxes on energy and tobacco. And yet this estimate does not take into account the latest emergency measures, such as an energy check and an inflationary premium of 100 euros each. But it is enough that inflation tickles the labels and makes us forget about these gifts. “For people who are heated by gas or electricity, small checks do not compensate for the increase in tariffs. “These are patches to hide the glitch,” sighs Marie-Claude Fourier, co-chair of the consumer advocacy association CLCV Touraine.

Therefore, it is not surprising that the contenders for the Elysee Palace go out of their way to propose solutions. The first target in their sights, salaries, of course. But how do you get them back? On the right side of the chessboard, we are counting on a decrease in charges. In order to raise net wages by 3% from next summer, as previously stated, Valerie Pecresse plans to reduce the old-age contributions paid by employees by 2.4 points. A gift worth about 7 billion euros, fully paid for by the state. Less accurately, Nicolas Dupont-Aignan (Debout la France) is offering his side an 8% increase for all employees up to three Smics and the self-employed, again thanks to lower fees. Same logic with Eric Zemmour (Reconquest), who intends to reduce the CSG for workers earning less than 2,000 euros per month.

To fund this bounty, all candidates promise to save money. Valerie Pecresse says she is ready to push through painful structural reforms (pensions, lowering unemployment insurance, abolishing 150,000 civil servants, etc.), Dupont-Aignan dreams of recovering 20 billion euros thanks to the fight against waste and fraud (which are really difficult quantifiable), and the polemicist Zemmour wants to tackle social benefits for foreigners.

But since, as we know from experience, these loud announcements are unlikely to come true, the matter risks a sleight of hand: in order to make up the deficit from the decrease in taxes, other taxes will have to be increased, in other words, returning here what was given there. “Of course, reducing employee contributions will restore the purchasing power of workers. But if we don’t want to widen the deficit even further, we will have to take compensatory measures,” confirms Eric Heyer of OFCE (French Observatory of Economic Conditions). So there are bound to be losers…

True to form, the Left prefers an increase in Smic to these accounting calculations. The amounts are different, but the principle remains. “We will have to raise wages so that the work pays and allows us to live in dignity,” insists the Socialist candidate Anne Hidalgo. The increase in Smic will require discussion, but there will be a massive revaluation of at least between 10 and 15% around 150 euros.

Jean-Luc Mélenchon (LFI) and Fabien Roussel (PCF) are respectively proposing revaluations of up to €1,400 and €1,500 net once they take office, while environmental candidate Yannick Jadot is offering a net increase of €125 in the summer of 2022. up to a gradual increase to 1,500 euros net at the end of the mandate. As for Philippe Putou (NPA), he is demanding 1800 euros net or nothing, without the slightest regard for the competitiveness of our companies and therefore their ability to keep busy! “Such growth will not only not reduce it, but will increase the number of poor people in France,” says Gilbert Tees, professor of economics at Neoma Business School and president of the minimum wage panel. Recall that in Spain, a similar shock of 22% led to the destruction of 90,000 to 180,000 jobs in 2019.

We add that the imposed increase in the minimum wage will not solve the problems of poor workers, who sometimes combine several jobs without going full-time. “The introduction of bonuses or a negative tax below a certain income threshold — we have never been able to do this — seems to me more effective in addressing these categories,” said Hippolyte d’Albis, co-president of the Circle of Economists. But it is more difficult to implement and less symbolic than raising the minimum wage.

It should also not be forgotten that these measures cost public finances dearly. Many state-supported contribution exemptions are indeed available to workers who earn two, three, or four times Smic. “When you raise the minimum wage, you automatically increase the number of people eligible for such a device,” notes Eric Heyer. The OFCE study showed that a 1% increase resulted in additional spending of 0.11 points of GDP for the state budget, or almost 2.4 billion euros.

Should we therefore uphold the principle of “work harder to earn more”? The formula emerged during the campaign thanks to Nicolas Sarkozy’s former budget minister, Valerie Pecresse. If elected, the LR candidate promises to completely exempt overtime hours from tax – currently they are limited to a ceiling of 5,000 euros per year. She also wants to allow the French to convert their RTT into wages, also exempt from employer fees, and, again, “without limits.” Currently, the conditions do not encourage companies to buy out days for their employees, she argues. “This is not absurd, since the choice will be left to the workers to choose between more leisure or more income through collective bargaining,” agrees Gilbert Sette. Indeed, unscrupulous employers should not see this as an opportunity to keep wages low under the pretext of RTT buying out their employees.

But leave the salary there. To unload the portfolio of the French, we can also influence prices. And here the candidates are not devoid of ingenuity. Thus, the heat on energy and fuel prices revived the idea of ​​tax cuts, which, together with VAT and TICPE, can amount to up to 60% of the price of gasoline. More vengeful than its rivals on this issue, Marine Le Pen (RN) ensures that it immediately cuts VAT on fuel, heating oil, gas and electricity. “I think that this is the most effective measure – immediately return the French 12 billion!” she says. “The problem is that it will be very expensive, and that in the coming years France will not have the opportunity to reduce taxes or duties,” warns François Ekal, president of Fipeco and co-author of a note for the Montaigne Institute. on the prospects for public finances for the next five years.

Without lowering taxes, you can block certain prices. It is this mechanism that Jean-Luc Mélenchon and Yannick Jadot rely on to ensure access to essentials. Philippe Putou, for his part, simply demands “free access to meet basic needs: accommodation, travel, food, heating, medical treatment, study…”. Great promise on paper! “The state gave up price control in the mid-1980s … and then we beat inflation,” smiles François Ekal. Price freezes could also overwhelm companies’ finances and therefore push them into painful social plans. And here again there will be the most modest, the most unreliable, the most vulnerable, who risk raising a toast by losing their jobs.

Without going further than his extreme left competitors, Marine Le Pen raises the idea of ​​nationalizing motorways, which would reduce their prices by 10-15% … Nonsense! Not only would the state have to spend a fortune (at least 40 billion, according to Bruno Le Maire) to buy companies, it would also have to compensate each year for lower duties, maintenance and all costs. “This offer is like no other,” says Gilbert Tees. In ten or fifteen years, these concessions will naturally end… and the state will be able to return them for zero euros!

There remains one last resort to support the end of the month for the most insecure: to re-evaluate social minimums and benefits. Between young incomes – 5,000 euros from Anna Hidalgo, from the age of 18 – “deconjugation” of AAH (which would allow it to be paid to more people and increase it), reassessment of the minimum age for old age, sanitation of family benefits, expansion of the PCA or the establishment of a universal income of existence, who remakes his hole among environmentalists, ideas and promises are not enough. Only now, according to the Accounts Chamber, the cost of all these social benefits from 2008 to 2014 has already increased by 43%, “not allowing recipients to get out of poverty.” Because, we must remember, the key to success in terms of purchasing power remains employment and, therefore, the good health of the economy. “What allows us to become richer is not benefits, but productivity growth,” sums up François Ekal. The candidates seem to have forgotten a bit about this.

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