New French Minimum Salary SMIC: Rates & Impacts
Re-evaluated French Minimum Salary SMIC
The French governement recently announced an increase of the minimum salary referred to as SMIC as of 1st of May 2022. Following the increase in January 2022, it is now increased by 2.65 %, bringing it to €10,85 per hour. As a comparison, the minimum salary of its neighbor Germany is set to €9,82 an hour since january 2022. From July 2022, the rate will increase to €10,45, from October 2022 the rate will increase even further to €12 an hour.
French Minimum Salary SMIC: Rates
| Effective date | Minimum hourly gross salary | Minimum monthly gross salary for a full-time position |
|---|---|---|
| 01/05/2022 | € 10,85 | € 1645,58 |
| 01/01/2022 | € 10,57 | € 1603,12 |
| 01/10/2021 | € 10,48 | € 1589,47 |
This is the third increase within a period of less than 12 months.
Grounds for the new Minimum Salary SMIC
This increase is due to the rise in inflation. Based on French labor laws the minimum salary is automatically re-evaluated during the current year when the consumer price index increases by more than 2 %. According to INSEE, the consumer price index for the 20% of households with the lowest incomes has increased by 2.65% in March 2022, compared to November 2021. As a consequence, the French Minimum Salary SMIC was re-evaluated by 2.65%
Who is impacted by the New French Minimum Salary
Employees who are currently paid the legal minimum are impacted, as well as trainees and apprentices whose salary is calculated based on the SMIC.
Other impacts of the New French Minimum Salary
In many industries, for an employment package to be competitive, wages well above the legal minimum salary are paid. Meaning, many employees won’t be affected by the increase of the minimum salary SMIC as of 1st of May 2022. Also, industries like the IT industry with its collective bargaining agreement SYNTEC already announced an increase of the CBA’s minimum salary due to the inflation.
Even if many employees won’t be affected by the re-evaluation of the minimum salary SMIC, it is still an important parameter with several impacts.
First of all, besides determining the minimum salary, it is also a reference point for many contributions as well as reliefs. As such, it has an impact on the employer’s payroll taxes.
Secondly, some benefits from the social security like the daily allowance payments in case of sick leave are limited in reference to the SMIC.
Lastly, it also serves as a reference for certain tax-free benefits such as vacation incentives.