Published on Oct 3, 2023 at 6:47 p.m.
This is not necessarily the feeling of the French, nor the diagnosis of many economists. The government expects a significant increase in purchasing power this year and next year.
According to the voluminous economic, social and financial report (RESF), an annex to the finance bill, published this Tuesday, it would increase by 1.3% in 2023 as in 2024, after having almost stagnated in 2022. Which would provide fuel to consumption and therefore to growth expected at 1.4% next year by Bercy despite the sluggishness of activity.
While purchasing power remains at the top of the French people’s concerns, this forecast will probably revive criticism of the executive’s excessive optimism. INSEE, for example, estimates that purchasing power will increase by 0.5% in 2023. For its part, the Banque de France expects, in its September projections, an increase limited to 0.9% this year. and next year.
Wages are growing faster than prices
The RESF nevertheless allows us to understand the driving forces behind the Bercy forecast. For the government, which has made work a major axis of its policy, it is first and foremost the good dynamic of income which should boost purchasing power.
The average salary per capita would increase by 5.3% this year, once again driven by the payment of the value sharing bonus (“Macron bonus”). In 2024, it would increase by another 3.1%. Real wages would therefore increase faster than prices given the expected decline in inflation. This should fall to 2.6% on average next year according to Bercy.
In the government scenario, the strength of the labor market would also play a role. In 2023, in a gloomy economic situation, the creation of salaried jobs would be limited to 175,000 on an annual average, a serious slowdown compared to the 355,000 in 2022. Contrary to certain economists who predict a rise in productivity and recovery job destruction next year, the executive continues to focus on the positive effects of the reforms undertaken (unemployment insurance reform, deployment of apprenticeships, etc.). It is therefore counting on 175,000 new creations in 2024.
In the recent period, “the sharing of value has been in favor of work”, we insist at the Ministry of the Economy and Finance. Thanks in particular to the indexation of the SMIC to inflation, unit labor costs increased faster than unit profits between the end of 2019 and the first quarter of 2023. To this will be added the revaluation of social benefits as well. beyond inflation.
The incomes of the French should also be further supported by the public measures implemented to cushion the shock of inflation and the surge in energy prices. According to calculations by the Directorate General of the Treasury, all of these measures should support the purchasing power of households to the tune of 21.4 billion euros in 2023 and 17.5 billion euros in 2024 (shield on electricity, in particular), after 20.5 billion in 2022.
“Without these measures, the purchasing power of the French would have fallen by nearly 3.5 points in 2022 and would have generally stagnated between 2021 and 2024,” underlines the document. Thanks to public intervention, however, an increase of around 3 points is expected over the period.
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