Moving away from political speeches to return to the economic situation and “recognizing the demands of reality.” Four days after the second round of legislative elections, the governor of the Bank of France, François Villeroy de Galhau, warns of the risks and asks political leaders to avoid “excessive wage costs” for businesses.
Asked on France Info about the proposal of the New Popular Front to raise the minimum wage by more than 200 euros to bring it to 1,600 euros net, the head of the Bank of France is categorical. Even if evaluations had not been quantified for this or that measure, “I believe that in economic competition, our SMEs, our companies cannot be weighed down by excessive salary costs, including the minimum wage, and by taxes that are too high,” he explained, adding: “That would be very bad for employment right away, and very bad for purchasing power in the long term.”
For Marc Sanchez, president of the Independent Workers’ Union (SDI), the additional cost linked to the increase in the minimum wage to 1,600 euros net would simply be “unbearable. Including social security contributions, this would add 530 to 540 euros per month, for an entrepreneur with three employees, or an annual additional cost of 18,000 euros”;
The Banque de France has already reported uncertainty among entrepreneurs “at its highest levels” since 2022, the governor suggested to dispel it by “telling the truth” and “recognizing the demands of reality”.
“We spend much more than we pay in taxes”
“The reality is that our economy has strengths, we are the 7th largest economy in the world, there are 30 million French people in work, many successful companies… We need to strengthen these strengths,” he said before pointing out what he sees as “two major weaknesses of the French economy.”
“We buy more than we produce, which results in our external deficit,” the governor stressed. And “we spend, including on social spending and pensions, much more than we pay in taxes. This results in the budget deficit,” concluded François Villeroy de Galhau.