The AGS* (Salary Guarantee Insurance) Board of Directors issued a press release on June 18, 2024, once again announcing its decision to increase the AGS contribution rate, which will therefore rise from 0.20% to 0.25% as of July 1, 2024.

Indeed, while this rate had been stable since July 1, 2017 (0.15%), it had already undergone its first increase on January 1, 2024, bringing it to 0.20%.

Why this (double) increase?

This is due to the current poor economic situation. Indeed, when companies go bankrupt, the role of the AGS is to step in to guarantee the payment of wages and compensation to the employees concerned. More insolvency proceedings therefore mechanically lead to an increase in the cost of compensating cases.

As stated in the AGS teams’ publications, this decision was taken in order to:

• Maintain the scheme’s financial balance: it is of course essential that the AGS has sufficient resources to fulfil its mission of protecting employees.
• Ensure the system’s sustainability: the AGS contribution rate ensures it can continue to compensate employees in the event their company fails.

What are the consequences of this increase?

Even a small increase in this employer-only contribution has financial impacts on companies, both in terms of social security contributions at a given point in time and in terms of payroll projections during budget-building periods.

The increase in labour costs may potentially reduce hiring intentions, but it also reduces profit margins and may even limit investment capacity.

An overview of the evolution of employer contributions over the past 10 years

Employer contributions have seen significant changes over the past decade, driven by several factors:

Increase in contribution rates:

• Ageing population: rising pension-related expenditure has led to an increase in pension contribution rates.
• Unemployment: periods of economic crisis have often been accompanied by higher unemployment, requiring stronger funding for unemployment insurance.
• Adaptation of social protection systems: successive reforms of social protection systems have sometimes led to upward adjustments in contribution rates.

Broadening of the employer contribution base:

• Inclusion of new pay components: certain forms of remuneration, such as stock options or benefits in kind, have gradually been included in the social contribution base.
• Extension to new categories of employees: the contribution base may have been extended to new categories of employees, such as certain corporate officers historically excluded, apprentices, or home-based workers.

A quantified response to social and environmental developments:

• Funding for new schemes: new public policies, particularly in ecological transition, vocational training and health, have required new funding.
• Adaptation to demographic and economic changes: population ageing and economic fluctuations have affected the financial balance of social protection schemes.
• Maintaining social protection: increases in employer contributions aim to ensure the sustainability of social protection systems and maintain an adequate level of benefits.

What comparative assessment can be made for the AGS between 2023 and 2024?

After a 2023 marked by many company failures, AGS figures show a trend.

In Q1 2024, the AGS opened 7,065 cases (nearly 20% more than in 2023). Persistent regional disparities, with significant increases in the overseas territories: Guadeloupe (+60%), Réunion (+52%) and Martinique (+43%).

The AGS covered the wages of 83,000 employees, +27% compared with Q1 2023, 26% of whom were in Île-de-France. Notable growth in education, health and social action (+91%). The retail sector fell by 8%, overtaken by construction (19% of beneficiaries).

In Q2 2024, the AGS advanced €508m, a record since 2015. Recoveries amounted to €112m, up 47%. Estimated contributions of €339.9m increased by 38% thanks to the contribution rate raised in January 2024.

Another increase again on January 1, 2025?

Thanks to the two increases in 2024, the situation would appear to be stabilising, but although it is still uncertain whether the AGS contribution rate will increase in 2025, it is decidedly prudent to consider this possibility and to follow the announcements in the second half of 2024.

Sources:
LESCHIFFRES_45.pdf (ags-garantie-salaires.org)
LESCHIFFRES_46.pdf (ags-garantie-salaires.org)