France announces 1.6% increase to minimum wage, impacting 64 industries

For full-time employees, the SMIC will rise from €1,477.93 to €1,502 net per month. This represents a gain of €23.65 net per month, or €284 annually, for the 2.8 million employees currently earning the minimum wage. The gross monthly amount will reach €1,801.80, and the gross hourly rate will be €11.88. Prime Minister Sébastien Lecornu described the increase as “the second largest in 20 years,” estimating a total SMIC increase of 5.3% by 2026.

Approximately one percentage point of the announced 1.6% increase corresponds to the automatic revaluation normally scheduled for January 1, 2027, which is being advanced. The remaining 0.6 percentage points are a government-decided increase. The last such boost occurred on July 1, 2012, when then-President François Hollande granted an additional 0.6% above the automatic indexation. Since then, governments have adhered to the legal mechanism, based on inflation and half of the purchasing power gain of the basic hourly wage of workers and employees. Sophie Binet, General Secretary of the CGT union, deemed the increase insufficient and called for a strike on November 17th.

The increase will cause the initial salary levels in 64 professional sectors to fall below the legal minimum. Jean-Pierre Farandou has requested the opening of negotiations the week following the announcement. The hospitality and restaurant industry, retail trade, personal services, and cleaning services are among the affected sectors. Revising the initial levels could also lead to adjustments in the higher levels of the salary scales to maintain their hierarchy.

A decree announced for the week of November 9th will condition employer payroll tax reductions on compliance with collective bargaining agreements. Companies whose sectors have not regularized their salary scales will lose access to these exemptions, which represent billions of euros in public aid annually. Employee representative bodies (CSE) will also be informed of the exact amount of reductions received by their employer. The government intends to use this condition to encourage increases in collective bargaining agreements.

The increase in the minimum wage will increase the payroll expenses of affected companies, partially offset by payroll tax reductions. In some labor-intensive sectors, wages can represent up to 70% of operating costs. Patrick Martin, President of the Medef (French employers’ organization), stated on franceinfo that “this is the wrong response to a real problem,” advocating for growth and investment instead of administered wage increases. A full pass-through of the wage increase to prices could neutralize the purchasing power gain for employees and fuel a price-wage spiral.

The government also announced the extension of the fuel bonus for workers who use their vehicles for commuting into 2027. According to Minister of Economy Roland Lescure, its ceiling will increase from €600 to €1,000. The tax exemption ceiling for overtime hours could also be raised from €7,500 to €10,000. These announcements follow an estimated imported inflation of 4.2% over a one-year period as of the third quarter of 2026.