By Caroline Pailliez

OTTMARSHEIM (Reuters) – When employees began leaving Fligitter’s French family-run window manufacturer Fligitter in droves to find better-paying positions in Switzerland, Fligitter realized it had to do more to keep its staff.

Fligitter management seized upon changes President Emmanuel Macron made to France’s labour laws in 2017. These allowed companies to give tax-free bonus in return for reducing overtime pay as well as length of service.

The firm and its employees reached an agreement last September to modify its pay structure. They introduced a monthly tax-free bonus and overtime pay. Additionally, they capped its service time rises at just five years from the industry average of 15.

Record inflation is threatening their purchasing power. Workers such as Herve Volochinoff believe the new pay agreement has really made a big difference.

His take-home income has increased from 1,450 euro per month to 1,600 euros (£1,712.64) due to the new structure, he stated.

Volochinoff told Reuters that he is short on overtime but would not turn down a wage increase. He was putting screws into a PVC window frame made at Ottmarsheim, Alsace in eastern France.

He stated, “Without the increase in my income, it would have been difficult for me to make ends meets,” and added that he intended to use the extra money to purchase furniture for his new flat.

According to Fligitter’s human resources department, the agreement resulted in 6-8% wage increases and a 4% increase for 80 employees.

Fligitter’s agreement is an example of French companies finding flexibility in France’s labour laws to satisfy employees’ demand for higher wages while minimising the impact on profit margins due to high raw material prices.

Fligitter stated that it had lost 6 to 7 workers per month. It was also struggling for replacements. But, Fligitter could not afford huge wage increases.

Macron allowed companies greater flexibility in setting working conditions, which made it possible for the new pay agreement. However, many workers and unions still hate the ex-investment banker because they believe he sacrificed their labour rights to the advantage of the companies.

The whole structure of the compensation system was not affected by any salary increases. Raphael Fligitter (the son of the founder) said that it was impossible to increase salaries without changing the entire compensation structure. 1a4f2c8e-b99d-4642-8fc9-1fd1ca7157d81

Graphic: Inflation in EU countries – https://graphics.reuters.com/FRANCE-INFLATION/mopanzqeqva/chart_eikon.jpg

WAGE PRESSURE

France’s high-priced government cap on power and gas prices has kept inflation in France lower than many other European nations, but it still reached a new record of 5.4% last month. It is causing employee demand for better wages.

According to the French central banking, sector-level wage negotiations led to an average of 3% increase in wages for French workers, as compared to 1% over recent years. However, as inflation rises, unions push for more wage negotiations.

Numerous companies seek one-off solutions such as tax-free bonuses that increase wages without locking in higher long-term salaries.

Macron’s 2017 reform allowed companies to reduce their pay to below the level stipulated by employees’ contracts in difficult times to preserve jobs.

According to the Labour Ministry, although such agreements are rare, almost 200 companies used Macron’s flexibility to deal with the downturn that occurred during the pandemic.

Employers take advantage of bad employment situations to claim that they have no other option. Boris Plazzi, the top CGT union official said that it is shameful.

GIVE-AND-TAKE

Fligitter’s agreement also reduces pension and welfare contributions making them cheaper for the company. Employees also receive lower contributions to pension.

Volochinoff claimed that he did not understand the implications of all changes on his pension. He said that the loss of additional pay due to length of service will only have a short-term impact.

Fligitter’s small group of executive executives had to make major sacrifices as part of the agreement. They agreed to lower potential severance packages, and lost three days of paid annual leaves. Although they do not receive the monthly bonus, their salaries were increased.

Jeremy Mosak is the head of the design division at the firm and has been with it for 16 years. He said that he was initially taken aback but then grew to like the idea.

He said, “I don’t believe I have come out of this badly.”

($1 = 0.9342 euros)