In France today the rhythm of political events is so relentless that a week away from the blog means missing out on a huge number of things, including, last week, what was hailed as a major event. The event itself (a televised interview with the President) turned out to be something of a non-event, but it was important in that it was partly about a subject that bothers the French people more than any other, le pouvoir d’achat. Like all of us the French are more worried about what concerns them personally than the fate of their compatriots (unemployment, banlieues, special retirement programmes etc).

First thing you notice about “le pouvoir d’achat” (once you’ve realised it has nothing to do with feline power (which in this household has increased alarmingly this year)) is that it is not the same as its English quasi-equivalent “the cost of living”, although both are popularly used as a source of complaint and anxiety and might appear to be the same thing. England emphasises cost, France power (how typical, some might say). One is about what we have to pay to stay alive (and should stay low), the other is about one’s power to purchase (thus the higher the better).

Le pouvoir d’achat is calculated principally by looking at how much is earned: INSEE, the national statistics office, calculates the total amount earned in France over a year and compares that to previous years. By that reckoning the pouvoir d’achat rose last year by 2.3% - in part, says Le Canard Enchainé, this is because the number of unemployed people fell, thus more people were earning, increasing the total amount earned. Since 2.3% is the highest figure, that’s the one the government uses. Others groups, including many economic analysts, says Le Canard, look more realistically at how much each household (some of whom do not earn) is spending. They come up with the much lower figure of an 0.8% increase in the pouvoir d’achat. The difference is said to be due to the rapidly increasing number of households as divorce becomes more common and the young move away from their parents when they go to university (which is a new phenomenon in France).

Obviously a single person’s household consumes less than a household with several children, so INSEE is now proposing another method of calculating based on individuals. By this method the pouvoir d’achat rose by 1.4%.

At the same time and rather confusingly, the same INSEE published a study showing that since 1978 the “average wage-earner’s income” has remained almost exactly the same – thus according to those figures no increase in purchasing power for the last 30 years. Worse it has actually gone down a bit in the last three years. But again this is deeply distorted since the figure includes part-time workers who scarcely existed 30 years ago. The buying power of those in full time work has risen by 20% over 30 years.

It should go without saying that in his infinite wisdom these statistical discrepancies are fully recognised by France’s president. In his televised interview last week he promised to set up a team to study “a buying-power index which at last corresponds with reality”. A promise which apparently left INSEE somewhat perplexed since, as they patiently explained, “An index is based on averages”. Indeed I am sure their figures would confirm that during the average course of the average life the average person never comes across anyone who admits to having the 1.65 cars, 2.19 children (my figures) and the 0.346 cats (my cats’ figures) we are all supposed to have.

But whatever the figures from INSEE say, and whatever the use made of them by politicians and others whose careers depend on them, there is a real problem with purchasing power in France. A large part of the problem comes from the minimum wage, known as the SMIC (Salaire minimum interprofessionnel de croissance). The French, not without reason, are very proud of their SMIC and use it as proof of their solidarity – no one can work for a pittance. However two things are worth saying about the SMIC. The first is that in France (and contrary to what many French people believe) the SMIC is not high – in fact it is less than its equivalent in the UK, Belgium, Ireland and Holland. The second is that, perhaps because they are so proud of it, there are far more French workers on the SMIC than in any other EU country except Bulgaria, and once on it, people tend to get stuck on it. 15% of the French workforce is on the SMIC as oppose to 2% of Brits. Thus a far higher percentage of the French workforce is concentrated at the bottom end of the wage ladder. The above figures (correct? massaged??) come from a joint piece by Rue 89 and Alternatives Economiques. But assuming they are true, they explain why, with soaring oil and food prices in particular, the French are so very concerned.

This entry was posted on Thursday, December 6th, 2007 at 10:21 am and is filed under Political. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.