Michelin and the ‘Living Wage’: The Legacy of Catholic Entrepreneurship

Dr De Lauzun quotes the ILO from 1919 but HH Pope Leo XIII laid out the doctrine of the living wage in Rerum Novarum, 44-46, in 1891. A workingman's wages ought to be sufficient to support 'himself, his wife, and his children...'

From The European Conservative

By Hélène De Lauzun, PhD

Founders saw social progress as the result of economic progress—something the state could not be expected to provide.

In mid-April, the global tyre giant Michelin announced its intention to introduce a ‘living wage’ for its employees, designed to meet the basic needs of a family. The measure is consistent with the history of a group with deep roots and family ties, which has always been committed to working for the well-being of its employees, and which was pushed in this direction from the outset by the Catholic faith of its founders. The Christian paternalism so much criticised by the Left still has a bright future.

The announcement was made on Wednesday, April 17th by Florent Ménégaux, the group’s current CEO. After discovering that 5% of his group’s employees, i.e., around 7,000 people, earn a very low wage, he announced that he wanted to roll out a “decent wage” for his 132,000 employees around the world.

Michelin did not invent the living wage. In 1919, the founding text of the International Labour Organisation already included a reference to “the guarantee of a wage ensuring decent living conditions.” Today, the concept is defended by various international bodies, such as the United Nations Global Compact. Its content has been clarified by the Global Living Wage Coalition. We can speak of a living wage when “the remuneration received for a normal week’s work by a worker in a particular place is sufficient to ensure a decent standard of living for the worker and his family. The elements of a decent standard of living include food, water, housing, education, health care, transport, clothing and other basic needs, including precautionary savings.” 

The tyre giant put it in its own words. This remuneration, which will, in fact, be above the national minimum wage, will represent on average, depending on the country, “between 1.5 times and 3 times the minimum wage”, according to Florianne Viala, the group’s remuneration director. It will be accompanied by a “universal social protection shield.” Already in France, no Michelin employee is paid the minimum wage, the SMIC, because the Group considers that its level (€1,766 gross per month) is insufficient. The group has set the threshold at €39,638 per year for a family of four (two parents, two children) living in Paris or €25,356 in Clermont-Ferrand, Michelin’s head office—compared with €21,203 for the SMIC, which is standardised at the national level. The gap between the two regions is already substantial. We can imagine that the “decent wage” proposed by Michelin will therefore vary considerably from one country to another—the group being present in China as well as in India and Brazil. 

The social protection shield should be rolled out by the end of 2024. It will include health coverage for employees and their children, a minimum of 14 weeks’ maternity leave, and four weeks’ paternity leave at 100% pay. It will also include death benefits with the payment of a lump sum for at least one year and an education annuity for children, regardless of the employee’s length of service.

At Michelin, management has long been convinced that the state cannot do everything to ensure the comfort of workers and that it is up to the employer to do his bit. For the boss, this is fair compensation for the efforts made by employees to keep the company alive and growing: “You devote time to developing yourselves and the company, and in return we give you the means, at the very least for a family of four—two parents and two children—that a single salary can provide for housing, food, leisure activities, a little savings, etc.”, Florent Ménégaux, the group’s boss, told AFP.

This corporate paternalism has been in the Michelin Group’s DNA ever since it opened its first bicycle brake pad factory with 52 workers in the Auvergne town of Clermont in 1889. Today, the group, which has sales of €28 billion (2023 figures), is the only company on the French CAC 40 stock market index to keep its headquarters outside the Paris region. Michelin remains strongly attached to its Auvergne identity, and to a town that the company’s policy has helped to shape in depth.

The company’s founder, Édouard Michelin, was keen from the outset to ensure that his company’s growth was accompanied by an ambitious social policy for its workers. The company was one of the very first in France to pay family allowances, at a time when the state paid little attention to this issue. The life of a Michelin employee interested the boss from birth to death. In Clermont, he built housing for them—garden cities that were renowned at the time—as well as schools, cooperatives, and hospitals. Children learnt to swim at the Michelin swimming pool. Every Sunday, families gathered for mass at the parish of the Divine Worker Jesus. A sports club was founded in 1911: the Association Sportive Michelin, or ASM. The club still exists, and the Clermont rugby team, Association Sportive Montferrandaise Clermont-Auvergne, which today offers some of its players to the French national team, is its direct heir.

His son, François Michelin, managed the company from 1955 to 2002, helping it to become the world leader in the tyre industry. Deeply respected by his employees, he made no secret of his convictions: he hated trade unions and, more than anything else, wanted his company to be run as a family business. He was firmly convinced that social progress could only come from economic progress, and that there was nothing to expect from the state in this respect—hence his determination to make his business ever more prosperous.  He had a deep-rooted Catholic faith, inherited from his grandmother, which guided him throughout his life in his social and economic choices, making him a very special entrepreneur in the French business world. At his funeral, held in Clermont Cathedral in 2015 by the bishop himself and one of his sons, now a priest, the crowd was so large that the building could not accommodate everyone, and the mass had to be rebroadcast on large screens around the city. His son Edouard succeeded him in 2006, before dying in a tragic boating accident. 

The French Left has always despised this dynasty, criticising its paternalism as condescending and seeing it as nothing more than a tool of control at the service of all-powerful employers, without realising that the workers did not see it that way. It was and still is common knowledge that Michelin is a great place to work. Concern for the well-being of workers is not the only advantage the company has to offer. Since the beginning of its history, the company has promoted a whole range of profit-sharing schemes for its employees, cleverly reinforcing their attachment to the firm. The contemporary concept of Corporate Social Responsibility has taken over from the old ideas of the fathers of the French tyre industry. 

The business has suffered and has had to transform itself after going through difficult times. But whatever its detractors may say, Michelin has managed to maintain its corporate ethic even at the height of the turmoil. The group has sought to drastically reduce its production costs but remains one of the tyre producers to have relocated the least. And when the time came to make redundancies, which were sometimes inevitable, the Christian conscience of the company’s directors was also evident. When Michelin closed a plant in France, as heir to its socially responsible past, it undertook not to leave anyone out in the cold by offering training or revitalising the site. 

“Management has always taken the trouble to avoid compulsory redundancies. There is a very strong corporate culture, which continues today”, points out Pierre-Antoine Donnet, former editor-in-chief of AFP and author of a Michelin Saga published in 2008.

Florent Ménégaux, the current CEO of Michelin, now number two in the industry, just behind Bridgestone, plays on his initials: FM, for François Michelin.  He does not claim to be a practising Catholic, nor does he come from the ranks of the family. But he has kept the spirit and intends to maintain the course of his company, which remains a formidable foil to all the critics of big business. Today, nestled at the foot of the volcanoes of the Auvergne, Michelin continues, with courage and not without difficulty, to prove that business and family, profit and humanity, globalism and identity can go hand in hand. 

Pictured: Logo of the Compagnie Générale des Établissements Michelin SCA