As French tire maker Michelin closed its factories during the coronavirus pandemic, Florent Menegaux, the company's chief executive, assessed the impact of the closures on employees around the world. An independent review found that thousands of workers in Asia, Europe and the United States on lower wages from the company could barely make ends meet. Michelin vows to do better.
Last week, the 134-year-old company had 132,000 workers at 131 factories in 26 countries, announced that it will guarantee all its employees a “decent wage” wherever they are in the world, part of a broader social plan to ensure that none of its workers have to struggling to make a living.
“If workers are just in survival mode, that's a big problem,” Mr. Menegaux said in an interview. “When the distribution of wealth within a company is too unequal, that is also a problem.”
The announcement quickly sparked a debate in France about what constitutes a decent wage and whether more French corporations should follow suit. Unions warn that Michelin's pledge will still leave some workers on the hook, and that it comes with no guarantee against future layoffs or facility closures.
Corporations around the world are looking to meet environmental, social and governance goals. A lot of investors are recede from ESG criteriaBut some companies are signing up to become employers pay a living wagecommits them to pay wages commensurate with the costs of rent, food, transportation and child care in the areas where their workers live.
In France, the cosmetics giant L'Oreal commit to a living wage and expand its commitment to its suppliers. Unilever are taking the same steps. Only one 4 percent According to the World Economic Forum, the world's most influential companies have made similar commitments.
Michelin's wage commitment has caught the attention of President Emmanuel Macron of France, who has said he wants companies to share more profits with workers. His government is facing a political storm as households struggle with a cost of living crisis. The proportion of workers earning the French minimum monthly wage of 1,766 euros, adjusted for inflation, has increased to 17% of the workforce from 13% just a few years ago.
French Prime Minister Gabriel Attal has called for negotiations with trade groups and proposed tax changes to encourage businesses to pay more than the minimum wage, which social organizations say is often not enough for workers. Animals can live until the end of the month without the government. subsidize.
Mr. Menegaux declined to reveal how much Michelin's lowest-paid workers worldwide earn, but said their wages are above the local minimum wage, which he described as is “inadequate salary”. He added that a living wage is a way to help move employees “at the bottom of the ladder up.”
He decided to act, he said, when Closed Michelin factories The pandemic has exposed weak social safety nets around the world. In France, the government protects workers from layoffs by paying companies to partially furlough them. But in other countries, that support is non-existent or inadequate.
To create a “decent wage,” the company, famous for its rubber Michelin Man mascot, consulted standards set by the United Nations Global Compact: the wage allowed for a family of four live “decently” in the city where they work. Mr. Menegaux said that means not running out of money before the end of the month after paying basic expenses and being able to save and spend modestly on goods or entertainment.
Michelin moved on Fair pay network, a non-governmental organization based in Switzerland, to evaluate its salary structure. The resulting study found that 5%, or about 7,000 Michelin employees worldwide, do not earn enough money.
In response, Michelin adjusted its pay scale to the cost of living in the cities where the company's factories operate. In Beijing, the group increased its lowest salary to 69,312 yuan per year, or a little less than 9,000 euros. In Greenville, NC, workers' base salaries increased to the equivalent of 40,000 euros per year.
In France, where the gross minimum wage is 21,203 euros per year, the company raised the salaries of its lowest-paid workers to 39,638 euros in Paris and 25,356 euros in Clermont-Ferrand, where it is headquartered. of the company and where the cost of living is high. lower than Paris.
But spending money to make a living doesn't worry Michelin shareholders. The company's shares are at a five-year high. “They expected Michelin to succeed,” Mr. Menegaux said. “And we're still delivering.”
The pay hike isn't entirely benevolent: Michelin needs to improve employee attractiveness and loyalty after worker turnover at its factories soared due to pandemic lockdowns. Mr. Menegaux added that better pay would help improve productivity.
“You get your payback,” he said. “Because when people are paid fairly, they are more likely to devote themselves and work better.”
Louis Maurin, director Observatory des inégalités, Michelin's commitment to a living wage shines an ethical light on one of capitalism's thorniest issues, said a social watchdog organization.
“All businesses should ask themselves this question,” he said. “Capital holders say work creates wealth. But the workers who create that value are often the lowest paid.”
In France, where half of workers earn less than 2,100 euros after taxes per month, a worker is considered middle class with a monthly salary between 1,500 and 2,800 euros, according to Observatoire data; Workers are considered “rich” if they earn more than 3,900 euros a month.
Some French lawmakers are seeking to cap executive pay at 20 times the earnings of the company's lowest-paid employee. French carmaker Stellantis caused widespread outrage when it announced last month that chief executive Carlos Tavares' 2023 salary could reach 36.5 million euros, 365 times his current salary. in. Average salary of Stellantis employees.
Mr. Menegaux requested that his 2023 salary be capped at 1.1 million euros; with performance shares, his total compensation amounted to 3.8 million euros.
Unions say the living wage falls short of what Michelin can. The company posted record operating income, a key measure of corporate profitability, of 3.57 billion euros in 2023 and a profit margin of 12.6%. Michelin spent 500 million euros to buy back shares last year.
Nicolas Robert, a representative of Union syndicale Solidaires, one of France's largest labor organizations, said of Michelin's wage commitment: “It's a nice publicity that hides everything else. He said workers at the Clermont Ferrand factories who received a living wage increase earned about 1,700 euros a month after taxes – not enough to support a family of four without additional benefits.
“After you pay for housing, food, energy and transportation, there's not much left,” Robert said. “What they call a decent wage is far from the reality: We have many workers who have been in survival mode since inflation exploded.”
Mr. Menegaux said the question of whether a company should accept lower profit margins or reduce share buybacks to devote more of its assets to paying workers is a debate. acrimonious.
“I strongly believe that what makes a good company versus a struggling company is the level of social engagement it achieves,” he said. “Personally, I think globally, capitalism has gone too far. I believe in capitalism, but I think when wages are not enough for a person to predict the future, that's a problem.”
