As the Republic prepares to adopt a minimum wage for the first time on April 1st, France celebrated the 30th anniversary of the Minimum Interprofessional Growth Salary (SMIC) on January 2nd.
Its precursor, the Minimum Guaranteed Interprofessional Salary (SMIG) came into effect 50 years ago on February 12th. The half-century gap between France's adoption of a minimum salary and the imposition of a £4.40 hourly wage in the Republic is the result of a long difference of opinion between continental economists and politicians and their counterparts among les Anglo-Saxons, as the French refer to the English-speaking world.
The French insisted that by increasing demand, the guaranteed minimum wage stimulated economic growth. Furthermore, it was an instrument of social justice, and therefore an untouchable sacred cow.
British and US economists saw the minimum wage as artificial interference in the law of supply and demand and a deterrent to hiring that could only aggravate unemployment. The challenge was to find a compromise between the "unemployment trap" created by French-style policies and the "poverty trap" in Britain and the US.
Over the past decade, the French and Anglo-American points of view have drawn closer. Two US economics professors produced a comparative study of the New Jersey and Pennsylvania fast food industries in 1992. To widespread amazement, it proved that in New Jersey - where the minimum wage was higher - employment increased, while jobs were lost in Pennsylvania.
Two years later, the British economists Dickens, Machin and Manning concluded that a reasonable minimum wage provided an incentive to work where there had been none, without making a company less competitive.
By June 1998, the Organisation for Economic Co-operation and Development - a long-time opponent of a legal minimum wage - admitted it could have some positive effects. Even the Confederation of British Industry dropped its opposition, and on April 1st, 1999, the Blair government established the first minimum wage in Britain.
The British minimum wage of £3.60 sterling (€5.72) is 10 per cent lower than the French hourly rate, while the cost of living in London and the south-east is 15 to 20 per cent higher than in France. Mr Blair insists he will not consider an increase before May 2001. In France, the SMIC is inflation-indexed, with an annual raise every July and automatic increases when the consumer price index rises more than 2 per cent.
Ironically, while others are coming around to the French view, the minimum wage has lost much of its lustre here. It has not fulfilled the goal of establishing a social safety net for all employees. More than 15 per cent of the French workforce - 2.8 million people - earns less than the minimum monthly wage of Ffr 6,881.68 (£826.13, €1049), and this often in accordance with the law. Worse yet, the proportion of employees earning less than the minimum wage has risen from 11.4 per cent in 1982.
By establishing part-time, minimum wage "Employment Solidarity Contracts" (CES), the French government has undermined its own objectives of financial equality.
Another government measure that allows apprentices to be paid as little as 25 per cent of the SMIC contradicts the idea that the minimum wage ends the exploitation of young workers.
In the clothing industry, hotels, restaurants and construction, employers have long drawn on the black economy - not so much to avoid paying the minimum wage as to escape onerous social contributions of at least 40 per cent over and above the worker's salary.
Illegal labour is spreading in France as the service industry and retail trade rely more and more on sub-contractors who use undeclared workers.
Because the new law on the 35-hour working week promised that employees moving from 39 to 35 hours a week would not be penalised, it created the absurd situation of two minimum wages, depending on whether a worker was hired before or after the law takes effect. Those hired before are guaranteed 39 hours pay for 35 hours work; those hired after will receive only 35 hours pay.
Over the years, even left-wing French economists came to admit that France's high minimum wage worsened unemployment. Only last year, a report by the High Council for Employment, Revenue and Costs (CSERC) estimated that every 1 per cent increase in the SMIC led to the loss of between 4,000 and 20,000 jobs.
But high social contributions represent a greater disincentive to hiring than the minimum wage, so the Jospin government has decreased social charges at the lowest salary levels. Management groups complain that restrictions on firing are another serious structural impediment to employment.
As France returns to economic growth, the debate could be overtaken by events, as it has been in Ireland - where the government is sticking to its £4.40 minimum wage despite the de facto rate of £5 per hour set by the the labour market for fast-food workers and cleaners.
The French SMIC - earned by two million French people - is lower, at Ffr 40.72 (£4.88). Over the past year, labour shortages have arisen in the French information technology, aerospace, high technology and construction industries. As unemployment falls and the demand for labour rises, the lowest salaries may also rise, without government intervention.
Most developed countries now have a minimum wage, although in Germany and Scandinavia management and trade unions agree on rates in all fields except construction and public works, where the government steps in.
France alone practices the curious custom of holding arduous negotiations between management and unions which usually arrive at salaries lower than the government-fixed rate, and which are therefore inapplicable.
This is the result of the weakness of French trade unions and the obstinacy of French management, and it goes back to 1950 when the first minimum wage was established. A worker-management commission could not reach agreement then, so the government imposed a rate. The experience has been repeated annually for the past half century.
