Despite their good results, French automakers are imposing wage moderation

February in corporate France is both the month of the presentation of financial results and the month in which management and trade union organisations must close the so-called Négociations Annuelles Obligatoires ("mandatory annual negotiations").

 

Led in the midst of the "yellow vests" social movement in a context where PSA is doing very well and Renault is doing well, one might have expected that after having imposed years of hardship, manufacturers would have given up a little in France and granted the wage increases requested by the unions for 2019.

Indeed, while management is quite happy to grant bonuses that have the great merit of being able to be awarded or not from one year to the next depending on the company's results, and are also exempt from social security contributions, they are reluctant to accept general salary increases.

Conversely, trade unions would like to obtain wage increases that are irreversible and involve an increase in contributions and, therefore, in unemployment or pension rights later.

 

As L'Humanité (French communist daily newspaper) pointed out on Wednesday:
"Widely encouraged by the government, for example through the PACTE law currently being debated in Parliament, the modulation of compensation through incentives or profit-sharing encompasses a number of perverse effects, most notably the absence of regular wage increases. Not subject to social and employer contributions, these exceptional bonuses effectively contribute to drying up the financing of the Social Security system, while giving the illusion to employees of a significant improvement in their purchasing power.  "We want fewer bonuses and more wages," PSA's CGT (a radical workers's union formerly linked to the communist party) reacted yesterday in the tense internal context of mandatory annual negotiations".
All the organizations were on that line.

 

This is not really what happened since, while inflation was taken into account in 2018 at 1.4%, the negotiations were concluded with an slight increase in budget of +2.6% for PSA and +2.8% for Renault.
Last year, it was +2.3% at PSA and +2.4% at Renault. These budgets cover both general salary increases measures and individual increases.
In detail, at PSA, the 2.6% increase granted to workers and employees corresponds to a 1.7% general increase with a "stub" (i.e. a minimum) of 38 euros and a 0.7% individual increase (including seniority). Technicians and supervisors are treated differently depending on whether or not they access the "variable group share" : if they do not benefit from it, they benefit from a general salary increase that just catches up with inflation with a 42 euro stub and an individual increase of 1%.
For those affected by the "variable group share" as well as for managers, only individual increases will have to remain within the 2.6% envelope.
At Renault, workers and employees will have 1.4% of general salary increases with a 25 euro stub and managers will only have individual increases in the 2.8% budget.

 

If we refer to the payrolls available in the annual reports of the two groups for 2017, these were €2,842 million for PSA Automobiles SA in France and €3,368 million for Renault for a workforce of 50,774 and 47,711 respectively.
This means that, apart from profit-sharing and other bonuses (the so called "purchasing-power premium), the additional cost associated with these budgets will be 74 million euros for PSA and 94 million euros for Renault.

Bearing in mind that PSA and Renault's financial results showed net earnings of €3.3 billion and €3.45 billion respectively, the effort made for wafes seems to be measured. The negotiating skills of French employees remain much weakened.
Carlos Tavares announced, when presenting the results, that he makes the reduction of the share of wages in proportion to turnover a target for the company, and that PSA had decreased it from 12% in 2015 to 9.7% in 2018, whereas Opel-Vauxhall had started at 15.2% and was, in 2018, at 12.6%: it is not the French employees who will increase these ratios!

 

If this is the case, it is because the French employees of the two French groups remain in competition with the other European employees of the manufacturers who, systematically, cost rather less or even much less.
Thus, according to Rexecode, in manufacturing industry, in 2018, the hourly cost of work in France was 39 euros (compared to 41.3 in Germany). It was 23.4 euros in Spain, 17.6 euros in Slovenia, 12.6 euros in Slovakia and 12.7 euros in the Czech Republic, to name but a few countries hosting sites competing with French sites.
One could have imagined that the gap would gradually close and this effect is not obvious: in 2004, the French worked hour was 12 euros above the Spanish hour, 20 euros more expensive than the Slovenian hour and 25 euros more expensive than the Slovak or Czech hours. In 2018, the gaps are respectively 16, 22 and 27 euros and have therefore widened over the last 15 years...

 

French employers in the automotive industry hardly need to recall these figures. Each model assignment is there to remind plant employees of this. And R&D is beginning to be subject to similar comparisons.

 

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Translated with www.DeepL.com/Translator, corrections by Géry Deffontaines