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For a gross salary etc

You're right to look at the gross, not the net as Agnes did. But the numbers you give concern salaries above a certain level (about 130% of minimum wage). Beneath that level, employers get "relief" on social contributions, so they are less than 40%. On the minimum wage itself, I don't know the figure offhand, but the payroll contributions are not that high.

These cuts on low-salary payroll contributions were brought in gradually over the years to encourage hiring of unskilled workers. In the end, they produce a "perverse" or unintended effect of encouraging employers to keep as many employees as possible down in that low-contribution zone. (A "low-wages trap"). This is the main reason (imho) why the percentage of minimum-salary earners is high, as Munchau points out.

BTW, I think the median salary in France is about 130% of minimum salary, so we'd be talking about half the employee population in this lower-payroll contribution bracket.

The other thing I'd like to point out about what Agnes says is that the social contributions are deferred salary (health, pensions, unemployment insurance, etc). The true wages that correspond to the post you hold = the mass of your gross pay + employer contributions.

Personally, I think it would help the employment situation to bring employer contributions down, but paying for solidarity would have to be shifted elsewhere, on to income tax or a parallel tax most likely. Also the question would necessarily come up: who gets the money from the cut: the employer alone, the employee alone, or a share-out between the employer and the employee's salary?

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 27th, 2006 at 09:02:53 AM EST
[ Parent ]
One of the things they have done here is to reform things to mostly avoid the particular poverty trap where an increase in gross wages led to a decrease in take home pay through perversity.

The payroll contributions drop off quickly here as well. You'd pay very little income tax or social contributions on a minimum wage employee.

by Colman (colman at eurotrib.com) on Mon Mar 27th, 2006 at 09:13:41 AM EST
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That's what needs to be done in France, and not only on the low wage employee category.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 09:41:46 AM EST
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I fully agree on the low contribution zone issue as well as on the fact that employer's contributions should be lowered.  
However, I am afraid I cannot share your view that social contributions are deferred salary.
The retirement section  by all means is not, as you will reckon being familiar with the French pension system. The health insurance either. Considering the basic 60% reimbursement rate for medical care basic expenses, I would prefer to contribute to a different system.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 09:39:13 AM EST
[ Parent ]
So you are in favour of lowering social solidarity contributions and not replacing them with anything but your own choice of private supplier? Meaning that public health and pensions schemes disappear?
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 27th, 2006 at 09:47:39 AM EST
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I am in favor of a contribution that will guarantee a 100% refund rate to the less affluent, and for that I am happy to pay. Not for a system where almost everyone (except those covered by the CMU) end ups with a 60% refund despite costly contributions.
As for myself, I am more than happy to continue paying for my own private health insurance.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 09:58:30 AM EST
[ Parent ]
Isn't top-up health insurance (mutuelle) included in the payroll contributions you mention? Meaning, yours and your employer's? Or does your job come without that, and you have to pay for personal top-up insurance?

(If my questions are indiscreet, don't give indiscreet answers ;))

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 27th, 2006 at 10:08:53 AM EST
[ Parent ]
It is, it mean the top-up is included, not your question is indiscreet :)
What I would favour is a more re-distribution oriented health contribution system, were the contribution need would be based on  a 100% refund for those who cannot afford a top-up mutuelle, and 0 refund for those who contribute to a top-up scheme altogether. I am sure we would end up with a lower blended contribution rate.

What is specific to the French banking system is that the top-up mutuelle is optional (which is good)in some of the banks, while in others joining the in-house top up scheme is a CP of your employment, irrespective of the salary you earn.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 10:27:15 AM EST
[ Parent ]
On your second point, I'm not sure, but I think it's general (ie not only banking) that an in-house scheme is either optional or compulsory depending on the deal the employer has negotiated with the insurer; if it's a "whole-house" deal (with subsequent savings for the employer), it is legally binding on all employees, you can't opt out of it. If not, you can, but it costs more.

On the first, that would be a big change you're suggesting. I don't know how well it would work. An example is Medicaid in the States, but there are numerous problems there, particularly with low-wage earners who are not "poor" enough to qualify but don't get a scheme with their jobs, and aren't rich enough to fund their own.

But essentially, you seem to me to think that a private system (bar a kind of Medicaid) would be more efficient than the public health service à la française. Where do you think that public service goes wrong?

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 27th, 2006 at 10:42:29 AM EST
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I have posted a couple of diaries end last year on the topic.
Health care in France : following the UK example

French health care reform : undermining the Government security net

That was the result of a research work I did for my former employer, the idea being to explain to a US board how the French health care system worked and why it was being reformed and so on.
I could set myself a target of making an update diary focused on answering your question.

When through hell, just keep going. W. Churchill

by Agnes a Paris on Mon Mar 27th, 2006 at 10:54:24 AM EST
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Please do, there are large debates on the UK NHS at the moment, which might provide useful crossover.
by Metatone (metatone [a|t] gmail (dot) com) on Mon Mar 27th, 2006 at 03:44:31 PM EST
[ Parent ]
I will do it one of these days, when I'm back here for real. The reasons that made me quit still hold.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 03:58:41 PM EST
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Do they extend to answering email? ;)
by Metatone (metatone [a|t] gmail (dot) com) on Mon Mar 27th, 2006 at 04:02:43 PM EST
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I think you've had the answer to your question by now ;)

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 04:26:54 PM EST
[ Parent ]
 ... would be conducive to increased employment rate and decreased expatriation rate.

When through hell, just keep going. W. Churchill
by Agnes a Paris on Mon Mar 27th, 2006 at 09:43:17 AM EST
[ Parent ]

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