Informations Rapides · 16 June 2022 · n° 154

In Q1 2022, labour cost index – wages and salaries increased by 2.4%, total labour cost index by 2.8% Labor cost index in industry, construction and services - first quarter 2022

In the first quarter of 2022, the number of hours paid by employers fell compared to the previous quarter due to the increase in the use of sick leave, attributable to the Omicron wave. However, it is no longer significantly affected by the short-time working scheme, whose extent has returned to its pre-crisis level in all the sectors. At the same time, the payroll increased sharply in the first quarter of 2022, driven in particular by wage negotiations within the industry-level collective wage agreements in the context of accelerating prices since the end of 2021; in addition, the minimum wage was increased by 0.9% on 1st January 2022 (after already having been raised by 2.2% on 1st October 2021).

Various labour cost reduction measures are taken into account in the labour cost index and contribute to its variations until the first quarter of 2022.

First, the special bonus for purchasing power, free of any tax, has been extended from 1st June 2021 to 31st March 2022. All firms were eventually allowed to pay this bonus over this period, up to a limit of 1’000€ to employees whose wage was lower than 3 times the minimal wage (and up to a limit of 2’000€ for firms having signed a profit-sharing deal).

The “1 young person 1 solution” plan, launched at the end of July 2020 and extended until June 2022, provides under certain conditions for a premium, up to 4’000€, to the employers hiring a young worker under 26 years of age. It also provides for an exceptional assistance when hiring a young worker with a sandwich course contract, up to 8’000€ if the worker is older than 18 years old and up to 5’000€ otherwise.

Last, the plan to support the tourism sector decided on May 2020 provides for exemptions from employers’ social security contributions and assistance with the payment of contributions for the firms with fewer than 250 employees in some sectors, especially concentrated in trade, accommodation and food services and administrative and support service activities (list extended in October 2020). These labour cost reduction measures had been gradually lifted during 2021 and were finally reactivated for some specific situations in December 2021 and January 2022.

In the first quarter of 2022, the labour cost index (LCI) - wages and salaries in the non-farm business sector increased by 2.4% compared to the previous quarter, after an increase of +0.6% in the previous quarter (seasonally and trading days adjusted data).

Year-on-year, the LCI – wages and salaries increased sharply in the first quarter of 2022: +2.8% compared to the first quarter of 2021, after an increase of +0.4% in the previous quarter.

In the first quarter of 2022, hourly wages increased in construction (+0.6% quarter-on-quarter after +0.8%) and accelerated sharply in services (+2.3% after +0.7%) and industry (+3.6% after +0.2%). However, the sharp increase in hourly wages were at least partially counterbalanced by the resurgence of inflation.

Compared to the previous estimation of 18th March 2022, the quarter-on-quarter variation and the year-on-year variation of LCI – wages and salaries in Q4 2021 both have been revised upwards by 0.2 percentage points. More generally, the sub-annual evolutions of LCI – wages and salaries in 2020 and 2021 have been more revised than usual, due to the updating of the seasonal adjustment as a result of the atypical changes over this period.

In the first quarter of 2022, the total labour cost index (LCI) in the non-farm business sector increased by 2.8% quarter-on-quarter after +0.4% in the fourth quarter 2021.

Over a year, the total LCI increased by 2.8% in the first quarter of 2022, whereas it had been nearly steady in the previous quarter (+0.1%).

In the first quarter of 2022, as in the previous quarter, accommodation and food services sector stands out for a year-on-year decreasing hourly wage (-1.3% after -2.9%) while the total labour cost rose sharply (+6.9% after +6.6%). This disparity in trends is the counterpart of the one observed a year earlier: at the beginning of 2021, the extensive use of short-time working in this sector had mechanically increased hourly wages (by composition effects, the lowest paid employees being more removed from the calculation of the average), while the exemptions from employers’ social contributions and the assistance with the payment of contributions had contained the increase in the labour cost.

Compared to the previous estimation of 18th March 2022, the Q4 2021 quarter-on-quarter variation in labour cost index in the non-farm business sector has been revised upwards by 0.2 percentage points; the year-on-year change has been revised upwards by 0.1 percentage points. More generally, revisions of labour cost index – wages and salaries over the the previous two years have been higher than usual this time and have contributed to those of the total labour cost index.