One fellow blogger was wondering why salaries are so low in France. I had to do some research on that. I found one article (in French) that explains partly the problem. An employee only bring home half of what he costs for an employer. The social charges (costs on salaries) are used to pay retirement pensions, and social security. The most surprising thing is that only half of the households in France pay income taxes, because of their low salaries, so less revenue for the government. France comes in second for the highest social charges on salaries within the OECD. In this article, it says that the Government collect 3 time less Income taxes than Germany.
In Canada, unemployment is stable. In France, it is high 10,9%, and amongst the young workforce (15-24 years old) is around 24,6%. I suspect the unemployment rate is higher than the government officials want to admit.
Labour : Canada VS France
In Canada, we start working really early. At 16 years old, teenagers get their first jobs, working at McD...etc. Maybe because they want to buy a car since they are allowed to drive at 16. In my time, student jobs are partially subsidied by the governement (less taxes on salaries for instance).
When in college, we have to work too, to finance our schooling and appartment. We can also apply for a student loan from the Province. After graduation, we just work, in our field of studies or not...There is not a long period of wait after graduation to land a job. We already have some experience in the job market.
In France, teenagers and young adults depend more on their parents for financial aid. Since their work load in school is greater than in Canada, they can't really have a part-time jobs. Or shall I say (without ruffling feathers) that young French people don't want to have a minimum-wage job because it is not related to their fields of studies. Of course, I may be generalizing...They also have internship where they work for free or less than 300 euros per month. Talking about cheap labour. Internships don't even count as work experience.
Consumption
In Canada, having a job is important, because we are such a consumer society. We spend a lot more than in France. Where here, the majority of businesses are closed on Sundays and clearance sales are regulated by the government. The wages are so low that people would only spend during those clearance sales, which occur only 2 times a year. Households spending is a motor for the economy, no consumers no economy.
Hiring
I got to learn a lot on human ressources in France. A couple of years ago, we had a a peak activity for the business. We had to hire because we had deadlines. We used subcontractors but thought it was too expensive and they don't really care about quality work. We hired a few young people, who we thought were willing to work. Shortly after we gave them their CDI (permanent contract), we started to get various demands and a rise of absenteeism.
When the French government changed its policy on green energy, we had a dropped on our activity. So we had to lay off some of the employees. We did not know that this could turn into hell rapidly. Not only they have rights, but the process can drag for weeks. You have to inform the employee that you no longer need him either in person or by a registred letter.
Then, 10 days later, you will need to have a meeting and explain to him why you have to let him go. Then, you have to wait 20 days or 30 days (I forgot) to finally see him leave. Of course, you have to pay a month of salary plus the month that he is not really working (the 20-30 days waiting period) and all the social contributions that you owe to the unemployment agency and other social agencies. Since we install solar panels, we are under the "construction and public works" regime, one of the highest social contributions on the salaries. It costs an arm and a leg to hire in this field, even at minimum wage.
Now we are overloaded with work but have to deal with less employees, because employees are difficult to manage and are costly. Hire and fire employees is difficult, more than in Canada. In France, they will take their time to hire someone because they know it will be difficult to lay him off. Here, people hang on to their job and don't expect to leave their position.In Canada, we switch job when we are over it or find another job that is more attractive elsewhere. This usually happens amongst young professionals.
In France, you will notice that when you want to call a plumber, he will not come immediatly because he doesn't have a bunch of employees available. You will also find closed businesses during July or August, they can close for almost a month. You would never find that in Canada.
In Canada, unemployment is stable. In France, it is high 10,9%, and amongst the young workforce (15-24 years old) is around 24,6%. I suspect the unemployment rate is higher than the government officials want to admit.
Labour : Canada VS France
In Canada, we start working really early. At 16 years old, teenagers get their first jobs, working at McD...etc. Maybe because they want to buy a car since they are allowed to drive at 16. In my time, student jobs are partially subsidied by the governement (less taxes on salaries for instance).
When in college, we have to work too, to finance our schooling and appartment. We can also apply for a student loan from the Province. After graduation, we just work, in our field of studies or not...There is not a long period of wait after graduation to land a job. We already have some experience in the job market.
In France, teenagers and young adults depend more on their parents for financial aid. Since their work load in school is greater than in Canada, they can't really have a part-time jobs. Or shall I say (without ruffling feathers) that young French people don't want to have a minimum-wage job because it is not related to their fields of studies. Of course, I may be generalizing...They also have internship where they work for free or less than 300 euros per month. Talking about cheap labour. Internships don't even count as work experience.
Consumption
In Canada, having a job is important, because we are such a consumer society. We spend a lot more than in France. Where here, the majority of businesses are closed on Sundays and clearance sales are regulated by the government. The wages are so low that people would only spend during those clearance sales, which occur only 2 times a year. Households spending is a motor for the economy, no consumers no economy.
Hiring
I got to learn a lot on human ressources in France. A couple of years ago, we had a a peak activity for the business. We had to hire because we had deadlines. We used subcontractors but thought it was too expensive and they don't really care about quality work. We hired a few young people, who we thought were willing to work. Shortly after we gave them their CDI (permanent contract), we started to get various demands and a rise of absenteeism.
When the French government changed its policy on green energy, we had a dropped on our activity. So we had to lay off some of the employees. We did not know that this could turn into hell rapidly. Not only they have rights, but the process can drag for weeks. You have to inform the employee that you no longer need him either in person or by a registred letter.
Then, 10 days later, you will need to have a meeting and explain to him why you have to let him go. Then, you have to wait 20 days or 30 days (I forgot) to finally see him leave. Of course, you have to pay a month of salary plus the month that he is not really working (the 20-30 days waiting period) and all the social contributions that you owe to the unemployment agency and other social agencies. Since we install solar panels, we are under the "construction and public works" regime, one of the highest social contributions on the salaries. It costs an arm and a leg to hire in this field, even at minimum wage.
Now we are overloaded with work but have to deal with less employees, because employees are difficult to manage and are costly. Hire and fire employees is difficult, more than in Canada. In France, they will take their time to hire someone because they know it will be difficult to lay him off. Here, people hang on to their job and don't expect to leave their position.In Canada, we switch job when we are over it or find another job that is more attractive elsewhere. This usually happens amongst young professionals.
In France, you will notice that when you want to call a plumber, he will not come immediatly because he doesn't have a bunch of employees available. You will also find closed businesses during July or August, they can close for almost a month. You would never find that in Canada.
If only French Government could understand that reducing salary contributions is one of the answer to lower unemployment. If more households have income, they will pay more taxes. It's a win-win situation.
This is a great analysis. I was very surprised to see teens working in Canada when I first came here. French employers don't take "kids" seriously and it's common to have your first work experience in university or even later! Crazy when you think of it.
ReplyDeleteThank you Zhu. Young workforce is supposed to be a positive addition to a Business. They have great energy and are willing to work. On the other hand, the job turnover is higher, it can be hard to keep great talents. In France, they are just good for cheap labour and the French laws allow this. Internship is "working under the table" legally.
ReplyDeleteThanks for the analysis.
ReplyDeleteI think I cost almost the same to my employer in USA and France, it just that my take home income is less in France due to all those social charges. On the other hand, if the government is going to lower them, that means they will have to decrease some benefits : childcare, unemployment, retirement, medical care, education... and each time they want to make a reform they are people on the street protesting, it is really not easy.
I started working at 14 during school holidays. I just asked my neighbor if I could work in his bakery and he took me in. It was very easy to find small jobs like that in Malaysia, I worked on and off during my high school years as sales assistant, teller in a bank. It gave me many valuable working experiences. But it is very different in France, maybe because of the employment laws? I mean a baker can't just take his neighbor for small job can he? He probably has to declare this and that with social charges.
Anyway, I don't think French in general are ready to give up the social benefits they are enjoying. So, the salary will remain low.
Even with all the social benefits French people are still not happy. It's just not enough to have a comfortable life. My father in law, who worked as an independent, only had 900 euros per month for his retirement. Someone's mother who was an independent nurse has 400 euros per month, high school teacher : 800 euros/month. I just don't understand how they can live with so little. The medical system is ok in France, but too generous. We are all greatful for this but some people are taking advantage off the system. I don't have the statistics on the french workforce, but there's an imbalance in the taxe system. I wish the job market could be more flexible here.
ReplyDeleteI know of one retired high school teacher, her pension is 2000€/month.
ReplyDeleteHow does the retirement system works in Canada?
I forgot to mention that school teacher hasn't contributed enough, retired early and started late.
ReplyDeleteIn Canada, you have to work until 65. The amount of the retirement pension depends on the work and salary. Some get 75% their salary, other less. Let's just say that some of retirees are often on vacation in Florida.
The internship system in France really worries me. There are some companies that just go from one intern to another. I got into a serious argument a friend about this a few years ago. She argued that the company shouldn't pay her stagiaire a full wage because he was not fully qualified, but then she went on to say that he was a great "employee" because he showed up on time every day, contributed to helping the team obtain a big contract, produced great work, etc., etc. I can understand not paying somebody who is just there for less than a month (often adolescents are are trying to decide on a career), but somebody who is at Bac+5 and is working for a company for 6 months deserves to be paid. End of rant.
ReplyDeleteYes internships are pretty much exploitation. I would say that some interns are motivated than "real" employees.
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