As French tire maker Michelin closes factories during the coronavirus pandemic, the company’s chief executive, Florent Menegaux, assesses the impact of closures on employees around the world. Thousands of workers on low corporate wages across Asia, Europe and the United States are barely able to make ends meet, an independent investigation has revealed. Michelin vows to do better.
Last week, the 134-year-old company, which employs 132,000 workers at 131 factories in 26 countries, Announce It will guarantee a “decent wage” for all workers wherever they are, part of a wider social plan to ensure no employee has to struggle to make ends meet.
“If workers are just in survival mode, that’s a big problem,” Mr. Menegaard said in an interview. “It’s also a problem when companies’ wealth is distributed too unequally.”
The news quickly sparked a debate in France about what constitutes a decent wage and whether more French companies should follow suit. The union warned that Michelin’s pledge would still leave some workers in limbo and that it did not guarantee there would be no future job cuts or factory closures.
Businesses around the world are seeking to achieve environmental, social and governance goals.Many investors are there Abandoning ESG standardsbut some companies are signing up to be Living wage employerwhich requires them to pay wages that correspond to the cost of rent, food, transportation and child care in the area where the worker lives.
In France, cosmetics giant L’Oreal is committed to providing a living wage and extends this commitment to its suppliers. Unilever The same steps are being taken.only 4% According to the World Economic Forum, many of the world’s most influential companies have made similar commitments.
Michelin’s wage pledge caught the attention of French President Emmanuel Macron, who has said he wants the company to share more profits with workers. His government is facing a political storm as families struggle with a cost-of-living crisis. The proportion of workers earning a monthly minimum wage of €1,766 (linked to inflation) in France has soared to 17% of the workforce from 13% a few years ago.
French Prime Minister Gabriel Attal has called for talks with trade groups and proposed tax reforms to encourage businesses to pay above the minimum wage, which social groups say is often not enough without the government. Workers receive subsidies until the end of the month.
Mr. Menegaard declined to say how much Michelin’s lowest-paid workers earn globally, but said they were paid more than the local minimum wage, which he called “not a decent wage.” He added that the living wage was a way of helping workers “at the bottom of society” to move up.
He said, when Michelin factory closed The weakness of the global social safety net has been exposed during the epidemic. In France, the government protects workers from layoffs by paying companies to furlough workers partially. But in other countries, this support is either non-existent or insufficient.
In developing “Decent Wage,” the company, known for its rubbery Michelin Man mascot, looked to standards set by the United Nations Global Compact: a wage that would allow a family of four to live “decently” in the city where they work . Menegaard said this means not running out of money by the end of the month after covering basic expenses and being able to save and spend modestly on goods or leisure activities.
Michelin turn fair wage networkis a Swiss-based NGO that aims to evaluate its salary structure. The study found that 5% of Michelin employees worldwide, or approximately 7,000 employees, are underpaid.
In response, Michelin adjusted wages based on the cost of living in the cities where its factories are located. In Beijing, the group raised the minimum wage to 69,312 yuan per year, or just under 9,000 euros. In Greenville, North Carolina, workers’ basic salary increased to the equivalent of 40,000 euros per year.
In France, where the total minimum wage is 21,203 euros per year, the company raised wages for minimum wage workers in Paris to 39,638 euros and in Clermont-Ferrand, where the company is headquartered and with a lower cost of living, to 25,356 euros. Lower than Paris.
But spending a living wage doesn’t worry Michelin shareholders. The company’s shares are at their highest in five years. “They want Michelin to deliver on its promises,” Mr. Menegau said. “We’re still delivering.”
The wage hike isn’t entirely benevolent: worker turnover at Michelin factories has soared in the wake of pandemic lockdowns, and Michelin needs to boost its appeal and employee loyalty. Mr Menegaard added that paying higher wages would help boost productivity.
“You will be rewarded,” he said. “Because when people are paid decently, they’re engaged and do better.”
Louis Morin, director Observatory of Inequality, A social watchdog group says Michelin’s living wage pledge draws ethical attention to one of capitalism’s most intractable issues.
“All businesses should ask themselves this question,” he said. “Those who own capital say that work creates wealth. But the workers who create that value are often the least paid.”
According to the Observatory, in France, half of workers earn less than 2,100 euros per month after tax, and workers with a monthly salary between 1,500 and 2,800 euros are considered middle class; workers with a monthly income of more than 3,900 euros are considered “middle class” rich”.
Some French lawmakers are seeking to cap executive pay at 20 times the earnings of a company’s lowest-paid employee. French carmaker Stellantis sparked widespread outrage last month when it announced that CEO Carlos Tavares could be paid 36.5 million euros in 2023, 365 times his 2023 pay. . Average salary of Stellantis employees.
Mr Menegaux requested that his 2023 salary be capped at €1.1 million; including performance shares, his total remuneration reaches €3.8 million.
The union said the living wage measures were not what Michelin could afford. The company reported that operating income (its main profit indicator) reached a record 3.57 billion euros in 2023, with a profit margin of 12.6%. Michelin spent 500 million euros on share repurchases last year.
“It’s good publicity to hide something else,” Nicolas Robert, a representative of the Confederation of Trade Unions, one of France’s largest labor groups, said of Michelin’s wage pledge. He said workers at the Clermont-Ferrand factory had received a living wage increase and earned about 1,700 euros a month after tax – not enough to support a family of four without welfare subsidies.
“When you pay for housing, food, energy and transportation, there’s not much left,” Mr. Robert said. “What they call decent wages is far from reality: many of our workers have been in survival mode since inflation broke out.”
Menegau said a key debate is whether companies should accept lower profit margins or reduce stock buybacks to use more of the company’s wealth to pay workers.
“I firmly believe that what separates a good company from a distressed company is the level of social cohesion it achieves,” he said. “I personally believe that, globally, capitalism has gone too far. I believe Capitalism, but I think when a salary is not enough for a person to plan his future, that’s a problem.”
