According to the OFCE, for four years, work income has not made the French richer

Work can be that “duty”, according to the Prime Minister, Gabriel Atal, but they rarely pay now. The last four years that the French economy has just experienced, punctuated by two major crises due to Covid-19 and inflation, have resulted in a growing discrepancy between wages and the purchasing power of households. A phenomenon that the French Observatory of Economic Conditions (OFCE) has just highlighted in a note published on Thursday 15 February.

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Experts from the Institute of Economic Studies summarize the situation as follows: “

Purchasing power is drawn (from 2019) By non-salary income components: It is essentially underpinned by asset income dynamics and then tax deductions. On the other hand, social benefits play a negative role on purchasing power, especially due to indexation lags – for example, retirement pensions were increased on 1.^er last January, and therefore does not affect the purchasing power of the year 2023 »Summarizes Mathieu Plein, one of the four authors of this note, along with Ombelin Julien de Pomerol, Raoul Sampognaro, and Pierre Madec.

This phenomenon has not been seen for more than three decades. And if necessary, it highlights the need to ensure even more “ Work pays better »As the executive often repeats.

Explosive cost of living

According to work by OFCE economists, during the “Covid period”, from 2019 to 2021, purchasing power (the reduction per unit of consumption, or UC, a measure used to take into account the size of households) increased by an average of 350 euros. per year. But this 1.8% increase mainly comes from extraordinary social benefits put in place by “whatever it costs” (+280 euros), such as partial unemployment and tax cuts (+120 euros). Purchasing power rather than labor income had a negative impact (-30 euros).

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From 2021 to 2023, the inflation crisis has changed the trend. Purchasing power then, with an increase of only 10 euros per year per unit, almost stagnated. This was due to the weakness of salary increases, while the cost of living had exploded; Between mid-2021 and 2023, the consumer price index rose by more than 11%. Energy grew by 36% and food by 21%, while these two items represent almost a quarter of total household consumption. And, during this period, labor income contributes 70 euros to the change in purchasing power, while social benefits reduce it by 530 euros.

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