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Inflation: Wages need to be re-indexed to prices

The inflation rate passed the 6% mark in August, and it is not over. While the SMIC has been upgraded four times since the beginning of the year, as the law dictates, the wages do not follow. The CGT requested the return of the wage-price moving scallop system abolished in 1983.

Inflation is taking hold in France: 6.1% in one year according to INSEE

Editor’s Note: This article comes to us from CGT in France. This article was originally published in August and was the first in of several articles published by the union on the effects of inflation on the working class of France.

This overall rise in prices affects basic necessities: food, energy, fuel, transport, etc. For their part, profits have never been greater for CAC 40 companies, demonstrating that inflation is a powerful indicator of the conflict between capital and labor.

Prices are rising, companies’ margins are exploding, but wages are not keeping pace and the loss of purchasing power is increasing.

“And the purchasing power law passed this summer is just a scattering of measures,” said Boris Plazzi, Confederal CGT Secretary, who is in charge of wages.

Especially since inflation does not have the same impact for everyone: when inflation rises, the loss of purchasing power is greater at the bottom of the wage scale.

“Today, the gap between the rate of inflation announced and the feeling is widening,” says Mathieu Cocq, an economist at the CGT.

Tomorrow, all smicards?

Proof that inflation is rampant, the Smic has, as the law dictates, has already been upgraded four times since the beginning of 2022 (1678.95 gross in August). And after repeatedly “indexing” pensions to price developments, the government decided this summer to a 4% increase in pensions.

“Some economists are talking about 10% inflation by the end of the year,” says Plazzi.

To combat the price increase that has become insurmountable for many households, the CGT is calling for the increase in the Smic to EUR 2 000 gross and the indexation of wages to inflation, with the return to the sliding scale of wages.

It is a mechanism for automatically raising wages and pensions on inflation. With immediate impact on all branches.

“Smic is catching up with low wages, the Smic is a salary to start in the workforce, a grid of grout for workers without a degree,” recalls the CGT spokesperson.

Deleted in 1983 by the socialist government led by Pierre Mauroy, in the name of the fight against inflation, the de-indexation of wages on prices is unfortunately confirmed. As a result, for 40 years, the purchasing power of wages has been gradually snacked.

“In 30 years, the share of wages in France’s wealth creation has lost 10 percentage points of GDP,” says Plazzi, using INSEE data. It is work that pays the price of inflation,” insists the trade unionist.

It is time to return to the staggered wage scale, a mechanism for indexing wages to prices, and equitable redistribution of wealth creation.

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