Informations Rapides · 15 September 2022 · n° 239

In Q2 2022, labour cost index – wages and salaries decreased by 0.2%, total labour cost index was steady Labor cost index in industry, construction and services - second quarter 2022

In the second quarter of 2022, the number of hours paid by employers rebounded moderately, following a drop in the previous quarter. On the one hand, the use of sick leave decreased, whereas it had increased at the beginning of the year due to the Omicron wave of Covid-19. On the other hand, the use of short-time working scheme decreased, its extent being comparable to its level before the health crisis in all sectors. The payroll also increased, driven by the 2.65% revaluation of the minimum wage on 1st May 2022 (after a 0.9% increase on 1st January 2022). However, it increases less than the hours, due to the deadline for the special bonus for purchasing power on 31 March 2022.

Various labour cost reduction measures are taken into account in the labour cost index and contribute to its variations until the second 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€ per employee whose wage was lower than 3 minimal wages (and even 2,000€ for firms having signed a profit-sharing deal).

Then, the “1 young person, 1 solution” plan, launched at the end of July 2020 and extended until December 2022, provides under certain conditions for a premium, up to 4,000€, to employers hiring a young worker under 26 years of age. It also provides for an exceptional aid for 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 measures have been gradually reduced as the health crisis came to an end; however, some employers still have the opportunity of charging to 2022 the remainder of the aid for the payment of contributions to which they were entitled in 2021 and from which they have not yet benefited fully.

In the second quarter of 2022, the labour cost index (LCI) - wages and salaries in the non-farm business sector decreased by 0.2% over the quarter, after a sharp rise of +2.0% in the previous quarter (seasonally and trading days adjusted data). This slight decrease was explained in particular by the end of the exceptional purchasing power bonus scheme at the end of the first quarter of 2022 and also by the rebound in hours worked (in the denominator of the index).

Year-on-year, the LCI – wages and salaries increased moderately given the inflationary context: +2.0% compared to the second quarter of 2021, after +2.5% in the previous quarter. It increased by +2.7% in industry, +3.0% in construction and +1.6% in services, this last sector covering diverse situations: for example, over a year, the LCI – wages and salaries increased by 1.4% in accommodation and food services and by 4.5% in finance and insurance. In services and more particularly in the accommodation and food services, the average hourly wage in the second quarter of 2021 was high due to composition effects (the still intensive use of short-time working at that time mainly concerned the lowest paid employees, who were more likely to be removed from the calculation of the average).

Compared to the previous estimation of 16th June 2022, the quarter-on-quarter variation has been revised downwards by 0.4 percentage points; the year-on-year variation was revised downwards by 0.3 percentage points. These downward revisions were mainly due to the upward revisions of hours worked in the first quarter of 2022.

In the second quarter of 2022, the total labour cost index (LCI) in the non-farm business sector was steady over the quarter: 0.0% after a sharp rise of +2.4% in the first quarter of 2022. These evolutions followed a similar pattern to that of the ICT - wages and salaries.

Over a year, the total labour cost increased by 2.2% in the second quarter of 2022, after +2.5% in the previous quarter. In the sector of accommodation and food services, hourly labour costs rose sharply over the year (+11.5%), while hourly wage increased moderately (+1.4%). This disparity in trends over a year reflected a “catch-up” effect: during the health crisis in 2020 and 2021, the extensive use of short-time working scheme in this sector resulted mechanically in a strong increase in the average hourly wage (by composition effects, cf. above), while the exemptions from employers’ social contributions and the aid for the payment of contributions contained the increase in the labour cost. As the use of these schemes tended to be significantly reduced, the total LCI increased much more strongly than the LCI – wages and salaries as a result.

Compared to the previous estimation of 16th June 2022, the Q1 2022 quarter-on-quarter variation in labour cost index in the non-farm business sector has been revised downwards by 0.4 percentage points; the year-on-year change has been revised downwards by 0.3 percentage points. As with the LCI – wages and salaries, these downward revisions were mainly due to the upward revisions of hours worked in the first quarter of 2022.