A study to increase the SMIC by 20% Overseas

A study to increase the SMIC by 20% Overseas
Written by on100dayloans

Olivier Sudrie, professor of economics at Paris-Saclay, carried out a study on behalf of the think tank “République et développement Outre-mer” (R&DOM) aimed at quantifying the cost and measuring the benefits of a minimum wage increased by 20% in the Overseas Territories.

Assuming that more than 50% of Guyanese live below the poverty line and some 30% of West Indians (compared to 14% in France), that the median salary in our territories is 200 to 400 euros lower than that France, R&DOM has launched the idea of ​​a “catch-up minimum wage”.

“Since none of the candidates proposes to question the over-remuneration of civil servants, explains Max Dubois, the president of R&DOM, the over-paid salary is the basis; the rest are underpaid. »

Beyond the problem of equity that this poses, it helps to make work unattractive for people who work at the minimum wage, ie 1270 euros, an insufficient salary to live in our territories given the high cost of living. The equation that was posed to Olivier Sudrie, also a founding partner of the DME firm, is as follows: is it possible to create an overseas minimum wage 20% higher than that of France, how much does it cost and to whom? ?

Such a minimum wage would concern 250,000 beneficiaries in the four overseas departments, or 80 of the employees. All employees being paid up to 1.3 SMIC would see their monthly salary increase by 220 euros. Beyond 1.3 SMIC and up to 2.5 SMIC, the increase would be decreasing with an average of 160 euros per month. This measure would cost 470 million per year, i.e. 2.3% of the overall budgetary effort of the State in the Overseas Territories, i.e. another 50% of the cost of the over-remuneration of State civil servants (950 million euros) or the equivalent of the cost of the over-remuneration of the territorial public service.

According to Olivier Sudrie, this increase of 160 to 220 euros would boost household consumption and help to boost savings. It assesses the increase in consumption at 1.6%, or 720 million, the effect on companies’ added value at +480 million, an increase of 12%. It still estimates that this measure would create or consolidate 4,000 jobs, or 0.5% of total employment. Not to mention the reduction in the wealth gap between the richest 10% and the poorest 10%, which would reach 15%.

Inflation risk?

Doesn’t this raise an inflationary risk? Wouldn’t that help to reinforce the famous “pwofitasyion”? It is the role of the observatories of prices, incomes and margins which would have to compare the increase in import prices and that of domestic prices with the key to a sanction for those who would like to capture the manna thus offered. .

The study is of course made available to the twelve presidential candidates. It is a priori attractive, but it does not solve the basic problem of the Overseas Territories which is that of a high cost of living based on an economy of imports and social transfers and not of production.

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