Wage increases lag behind inflation

The Bank of France reported that negotiated wages in companies rose by an average of 1.7% in the third quarter of 2026, while inflation reached 2.5% during the same period. This indicates a gap between wage growth and the rising cost of living.

Wage growth remains steady

The average annual increase in wages negotiated through company agreements remained at 1.7% in the third quarter of 2026, the same as the previous quarter. In professional sectors, conventional minimum wages rose by 1.2% on average.

Inflation outpaces wage increases

During the third quarter of 2026, the average inflation rate, measured by the consumer price index, was 2.5% per year. This is up from 2.1% in the second quarter and 1% in the first, showing a growing divergence from wage increases.

Minimum wage sees significant increase

The interprofessional minimum wage (Smic) was raised by 2.41% in June 2026, reaching 12.31 euros per hour or 1,867.02 euros per month for full-time work. This increase places the Smic 3.6% higher than its average level from one year earlier.

Minimum wage pressures sectors

The rise in the Smic has forced sectors that already pay above the legal minimum to review their salary scales. The Bank of France observed a 1.3% increase in minimum wages below 1.05 times the Smic, compared to a 1% increase for those above 1.6 times the Smic.

More agreements exceed 2% wage increases

In the third quarter of 2026, 24% of negotiated wage increases in sectors exceeded 2%, up from 16% in the second quarter. For company agreements, this proportion rose from 21% to 29%, though the average wage increase remained at 1.7%.

Timing of negotiations affects results

Sector and company wage agreements are often signed before the full impact of inflation is known. The third quarter typically sees fewer signed agreements, which makes interpreting changes in wage distribution more cautious.

Data sources and calculation methods

The Bank of France compiles its data from agreements published on Légifrance. It includes general and individual salary increases but excludes bonuses or overtime. In the second quarter, average salaries, including these components, rose by 1.8% annually.

Future negotiations face challenges

The next round of wage negotiations will need to account for rising prices and the increased legal minimum wage. The third quarter data shows that these factors affect wage scales and agreements unevenly, depending on the level of pay.