Lower labor costs do not support the export

A study by the Economic Analysis Council questions the expected effects of the CICE and the liability pact on the competitiveness of French companies.

While the big debate proposed by Emmanuel Macron has just begun to try to provide answers to the crisis of yellow vests, here is a study that will bring corn mill for those who claim that the CICE has been removed. "Lower taxes: stop or restart?" (1) questioned the Economic Analysis Council, an agency placed with the prime minister.

Tax falls above 2.5 Smic

After six months of work, based on new data from companies, the answer, published on Tuesday, January 15, is unambiguous: " the policy of decreasing burdens is not a policy of competitiveness "And the authors recommend that, for the budget for 2020, the burdens should be higher than 2.5 million, or even more than 1.6 billion dollars," if the upcoming France Stratégie evaluations (2) confirmed their disappointing results ".

The authors have linked the effects of spending cuts to social charges since the 1990s. Empirical work confirms that focusing on low wage exemptions has consequences for employment They say.

The study therefore encourages the ultimate reduction in the level of the SICI, announced for October 2019. " The expected impact on the use of this additional exemption (up to 1.6 million) is caused by 80,000 to 200,000 jobs. ", the study calculates.

A performance that is not on the rendezvous

On the other hand, the authors continue, " the ex-post evaluation of the CICE shows 100,000 jobs created or monitored per full year of the system, at a cost six times higher than the exemptions from low wages. "

So, Philippe Martin continues, " we support the transformation of CICE into lower social security contributions (as is the case from the 2019 budget, Ed), but only up to 1.6 smic. Above this threshold, the implementation of the cost reductions is not on the rendezvous with respect to jobs "Nor in terms of export, adds the study, which reminds us that the CICE (which gives exceptions up to 2.5 million) was" consommé At this stage, rising wages, or recovery of operating margins.

The aim of the CICE was to reduce the costs of labor in exporting companies, where the majority of the employees are paid well above the minimum wage. They have therefore benefited little from the exemptions from levies on low wages.

Presidential candidates all want to change the CICE

Expansion of the exemptions was therefore intended to help them increase their market share abroad. But neither the CICE nor the liability pact (which gives exemptions from 1.6 to 3.5 million) had visible effects on exports, according to the authors.

The question remains of support for French companies in favor of exports. " One of the answers could be to reduce production taxes in FrancePhilippe Martin answers. We are working on this topic. "

Marie Dancer