After realizing that the minimum wage in its home country left some workers at breaking point, French tire-maker Michelin has taken matters into its own hands to give employees a hefty pay raise.
Michelin is rolling out its own living wage to its 132,000 employees, the company said in a press release shared with Fortune and first reported by French publication Le Figaro.
It follows a three-year battle by the tire-maker’s boss to get buy-in and convince decision-makers at the group that a pay raise was needed to help staff members he described as being left in “survival mode.”
The 134-year-old group, which makes heavy-duty tires for construction and freight-handling companies, has set living wages for employees based on their location to correlate with living costs.
The calculation for the living wage was also made based on what employees needed to provide for their family’s “essential needs.”
In Paris, the minimum wage workers will take home has been set at €39,638 ($42,300) per year, while it is €25,356 ($27,100) in the more affordable region of Clermont-Ferrand, the site of Michelin’s headquarters. Both eclipse the national minimum wage of around €21,203 ($22,600).
“The minimum wage in France is not sufficient in Michelin’s eyes to meet what we consider to be a decent wage,” Florent Ménégaux, president of the Michelin group, told Le Figaro.
Michelin paternalism
The initiative has been rolled out across Michelin’s international bases. In the group’s U.S. hub of Greenville, S.C., workers will receive a minimum salary of $42,235, while in Beijing they will make at least 69,312 yuan ($9,600) per year.
Ménégaux says he was inspired to act after the company signed on to the UN’s Global Compact, a voluntary initiative encouraging businesses to adopt sustainable and socially progressive policies, and of which he represents the French network.
According to Ménégaux, a review from NGO Fairwage found that while most staff were in a good financial position, 5% were in “survival mode.”
He also points to increasing instances of former employees citing low salaries as their motivation for leaving. The group’s attrition rate rose from around 8% in the past to 13% in 2022.
However, the Michelin boss said he faced an uphill battle in convincing publicly listed Michelin to make this a reality.
“It took three years to convince within Michelin itself that wages needed to be increased,” he said.
Michelin, valued at about $26.5 billion, posted record annual profits last year.
The tire-maker has a history of progressive initiatives for its employees.
A research report from academics at Harvard Business School detailed how the group’s founders, brothers Édouard and André Michelin, built housing, recreational facilities, and schools for workers and their families near its Clermont-Ferrand headquarters, in a practice described as “paternalism.”
It launched a “trust experiment” at its Le Puy hub that saw workers take on more responsibilities, with managers shifting to a more supervisory role, something the company described as “responsabilisation,” the Financial Times reported.
Michelin has rolled this culture across its different bases, describing it as “learning for progress.”
