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France – Uncertainty around the future of the low wage subsidy

20 August 2012

Last Friday the French staffing industry held its breath for a few hours after the daily Les Echos announced the government had given up its plan to reduce access to the low wage subsidy commonly known as the Fillon subsidy (allègement Fillon). The relief was short lived as the government spoke person later denied any plan had been made yet on the matter.

Since 2010, the Fillon subsidy allows for a reduction of employers contributions paid for hiring employees with salary between the minimum wage (Salaire Minimum Interprofessionel de croissance, SMIC) and 1.6 times the minimum wage (SMIC). During the presidential campaign, candidate François Hollande announced plans to bring the higher the ceiling down to 1.5 times the SMIC. This was certainly not going to please the French staffing agencies as low wage workers represent a significant portion of candidates. This would have resulted in an extra €2.3 billion of social security contributions that the then socialist candidate planned to use to boost the French economy.

According to Les Echos, scrapping the subsidy could lead to a loss of 40,000 jobs. The industrial sector would have suffered the most, as the most populated salary band is in the area of 1 to 1.3 times the SMIC. This comes only a few days after the INSEE reported the French economy had lost 12,000 jobs in Q2-2012.

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