Intéressement et salaires : complémentarité ou substitution ? (version anglaise)

Sylvie Mabile

Description

Selon la législation française, l'intéressement s'ajoute au salaire. On devrait donc observer, dans les entreprises qui pratiquent l'intéressement, une rémunération totale plus élevée, mais pas de différence significative de la rémunération de base avec celles qui ne le pratiquent pas. Si, de plus, l'intéressement détermine des gains de productivité, les rémunérations de base devraient être aussi plus élevées là où l'intéressement est mis en place. C'est bien ce que l'on constate, sur l'année 1992, pour les établissements de plus de 200 salariés. Cependant, pour les établissements plus petits, le salaire de base accompagnant l'intéressement n'est pas plus élevé, voire souvent même plus faible, que celui établissements qui ne pratiquent pas l'intéressement. En fait, avec le temps, une certaine substitution semble s'effectuer. L'effet positif de l'intéressement sur les rémunérations totales diminue avec l'ancienneté des accords. Il devient même significativement négatif pour les salaires de base au bout de trois à cinq ans. L'intéressement s'avère donc bien être, pour les entreprises, un dispositif de flexibilisation salariale.

Sujets

• INSEE
• Salaire
• Employabilité, métiers et formations

Informations

• Publié par: insee
• Nombre de lectures: 91
• Langue: English

Extrait

Profit Sharing and Wages:
Complementarity
or Substitution?*
Sylvie Under French law, profit sharing is paid in addition to wages. One would therefore
Mabile** expect to find higher total remuneration in profit sharing companies, with a basic
wage not significantly different non profit sharing firms. Moreover, if profit
sharing determines productivity gains, basic wages should also be higher where
profit sharing is practised.
This is indeed the finding for establishments with more than 200 employees in
1992. However, the basic wage accompanying profit sharing in smaller
establishments is not higher and is actually often lower than in those
establishments without profit sharing schemes.
A certain substitution would appear to be taking place over time. The older the
contract, the lesser the positive effect of profit sharing on total remuneration. After
three to five years, it even has a significantly negative effect on basic wages.
Hence profit sharing acts as a wage flexibility mechanism for businesses.
iece wages, which used to be a fundamentaldevelopment of profit sharing (voluntary
*Originally published as Pemployee production incentive, have profit sharing agreements, see appendix I).“Intéressement et salai
res : complémentarité disappeared over the years. Today, they are
ou substitution ?,” Éco
found only in a few sectors (clothing, shoes,This wage policy lever is often seen as a way of
nomie et Statistique ,
etc.). Changes in job types, technological encouraging employees to share in theNo. 316 317, 1998
**Sylvie Mabile was advances and social progress led to a certain company’s goals. Greater employee involvement
with the DARES when
uniformity in the wage increases given by is thought to increase labour productivity.
she wrote this study.
companies, at least through to the early 1980s.
The trend has since turned around with a moreIn the mid 1980s, M. Weitzman’s theory
changeable, diverse demand and fiercer altered the nature of the debate on the effects of
competition driving a new search for flexibility profit sharing. He posited that the introduction.
At the same time, and this process is not of a variable wage proportion indexed to profit
peculiar to France, wage negotiations in lowers the “marginal labour cost” (the fixed
companies and even their establishments are part of the wage, i.e. essentially the basic wage)
becoming decentralised. Corporate wage and increases the demand for labour and
Names and dates in policies are becoming both more targeted, withcorporate production. Widespread profit
parentheses refer to the
the development of flexible individual wages, sharing in these terms is therefore a solution tobibliography at the end
of the article. and linked to group performances, with the the unemployment problem. However, such a
INSEE Studies no. 40, October 1999 1mechanism has to be promoted by the below market levels. In other words,
government since it cannot be spontaneouslyprofit related bonuses are paid in addition to
adopted in an uncoordinated decision making basic wages. M. Weitzman’s theory thus does
structure. not apply, in principle, to France. The
employment promoting, cash profit sharing
French law encourages profit sharing schemes, schemes he studies are based on reducing the
especially the scheme introduced in 1959, fixed part of the wage.
whose use has spread widely since a 1986 edict.
However, this particular scheme is associated withHowever, this theory could become relevant
the fundamental principle of non substitution foragain if profit sharing were to limit subsequent
the wage to offset its random nature. Frenchwage rises. Such is the suggestion of an
lawmakers felt that promoting profit sharing empirical analysis of 1992 wages accompanied
initially required equity considerations (social by official data on profit sharing. It finds that
harmonisation between capital and labour withthis “gradual substitution” concerns more
the surplus shared among all employees) andparticularly companies with less than 200
employee motivation (to encourage productivity). employees.
They also encouraged corporate savings plans,
for example, by only exempting employees
Can profit sharing have an adverse effectfrom taxation on the sums paid if they had been
saved in the company for five years. By on wages in the medium run?
promoting such an element of variable
remuneration, French lawmakers actually In practice, there is nothing to prevent profit
1discouraged reducing the fixed part of the wage sharing from interacting, even implicitly, with
to make up for profit sharing bonuses. subsequent wage rises (whether negotiated or
not). For example, if an upbeat economic period
is such that employees receive significant
The legal principle of non substitution bonuses fairly regularly, basic wage claims
might be lower in these companies than they
The principle of non substitution of profit would be if there were no profit sharing. The
sharing for wages has always been clearly late 1980s are a good example of an economic
stated. The scheme comprises measures that upturn whereby a large proportion of companies
prohibit substituting profit sharing for part of were able to pay profit related bonuses (91% to
the wage or existing bonuses. Under the current 96% of companies with an agreement) and the
legislation, it is impossible to adopt profit average sum paid to each recipient was relatively
sharing less than one year after eliminating anhigh (approximately 4,900 FF or 1.2 months of
element of remuneration (Law of 1994). Thethe net minimum wage on average for the 1988
government can check on this and revoke the and 1989 financial years).
right to tax and social security concessions
normally granted. Case law in profit sharing Eventually, and especially in an economic
has also developed considerably in this regard.turnaround, it is possible that any induced
It stipulates in which cases exemptions grantedrestraint on basic wages would no longer be
can be reclaimed should the profit sharing be offset by profit related bonuses, which are
“converted” into a wage (see the annual reports haphazard by nature. This could then lead over
of the Conseil Supérieur de la Participation). time to a real drop in the marginal labour cost
and even in the average labour cost. Profit
The consequence of the principle of the sharing, in spite of the non substitution clause,
non substitution of profit sharing for wages is a would therefore become a real wage flexibility
principle of the independence of wage mechanism.
negotiations from profit sharing negotiations.
The former are held by union representativesThis is the question studied in this paper using
2once a year and concern mainly large companies. an empirical approach. We endeavour to find
The latter are held once every three years ansome answers to the following two qued stions.
may be ratified by the entire staff, which is
generally the case in small companies. 1 The employer’s total labour cost is nevertheless reduced by tax
and social security concessions on profit related pay.
2 Since the law of November 1996, companies without unionIt can therefore be assumed that this
representatives may also sign wage agreements subject to
non substitution ensures that profit sharing certain conditions (sector check). This is a three year
companies do not normally pay basic wages experimental scheme.
2 INSEE Studies no. 40, October 1999Do profit sharing companies pay lower or Lastly, a dynamic element was introduced into
higher wages than other companies, other the analysis by adding official data to the 1992
things being equal? If there is a deviation, does survey to study individual employee wages
it depend on how long the profit sharing according to how long the companies
agreement has been in effect? employing them had been profit sharing. In
other words, wages are analysed by
If profit sharing is perfectly complementary to“profit sharing cohort” identified by the date of
wages, basic wages should not be lower in the first agreement signed. Companies wishing
profit sharing companies regardless of their to secure the tax and social security advantages
profit sharing methods, except where the profitof profit related pay are bound to file their
sharing is adopted by the least productive profit sharing agreements with the regional
companies (with the lowest initial wages). Thisdepartments of employment. One problem
assumption should be able to be tested usingremains, however. This date is only known if
data available on the 1992 financial year. The the agreement has been entered into the central
choice of 1992 is because the economy slowedfile and the company has not changed its
down in this year, with the lowest point of tidentification details since its first agreement. Ahe
cycle being in 1993. If the wage differential“date unknown” option was thus created for
between profit sharing and non profit sharingprofit sharing companies not found in the
companies is found to vary with the age of tofheficial file. This concerns less than one quarter of
first agreement, we could deduce that profit the sample’s employees in profit sharing schemes.
sharing influences wage setting. A decreasing
relation could be the sign of a certain “gradual
In 1992, total wages were higher substitution” of basic wages (the “fixed” part of
the wage deemed to be the marginal labour