Is the UK employee better off than the French employee?

In terms of tax, yes, much better off.

The above income comparison was made on 27 Feb 2014 when the Euro was valued at 82p.

The labour cost, which consists of the net salary plus the amount paid to the state, is important to the employer since large payments to the state will mean there is less money available to the employee. This is because employers have to compete with labour costs in other countries.

Comparing a net salary of £20,000 which is close to the UK average we see that a further 36% or £7,200 goes to the state. In France for this net salary, a further 97% or £19,400 goes to the state. Thus at this net salary level £12,200 more is paid to the state in France.

Looks like low-paid workers have high taxation in France?

Yes in France 82.32% of the net salary goes to the state from the first Euro. To make this clear, for a French worker earning €100 net per year, his employer will pay over to the state €82.32.

But the French minimum wage is higher in France than in the UK?

Let's look at the facts:

Minimum wage comparisons - France vs. UK	France	UK
Minimum wage as at Jan 2014	€ 9.53	£6.31
Hours worked per week (as an example)	23.30	23.30
Employer's NI	€ 4.08	£0.00
Employee's NI	€ 2.06	£0.00
Income tax	€ 0.00	£0.00
Net hourly wage	€ 7.47	6.31
Net hourly wage   euro=£0.82	£6.12	£6.31
Employer's hourly labour cost	£11.16	£6.31
% higher labour cost in France	76.89%
% of net wage taken by the state	82.32%	0.00%

 

There is very little difference between France and the UK in the amount in the pocket of the minimum-wage employee. However there are high National Insurance costs in France which cause the minimum labour cost in France to be 76.89% higher than in the UK. In fact for the employee to receive the same net wage as in the UK the labour cost would be 82.32% higher.

A high proportion of under 26 year olds are affected by the minimum wage. Above that age employees are more likely to have risen above minimum wage. So the low-paid industries in France are handicapped by a labour cost that is 76.89% higher than in the UK.

Could this help to explain the appalling rate of youth unemployment in France?