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Wages and Olympics bring doubt

5th of July 2024 Article by Christian Bouzols

French cleaning firms face uncertainty in 2024 as wages rise and the Olympic Games take place there. Christian Bouzols tells us more.

The year 2023 was an active but quite varied one for French cleaning companies and their clients. The economic background encouraged a high number of takeovers among companies large and small.

According to Patrick Klug, managing director of Entreprises et Décisions, a financial planner based in Paris, “the cleaning market is in quite good shape although it’s obvious that with an 11 per cent rise in wages over two years and the current rate of inflation in France, the cleaning sector is going to suffer.

“However, one should distinguish between the smaller companies - who can more easily pass on their costs to clients confronted with the same problems - and the larger businesses working with public or private clients - whose buyers a far more reluctant to accept substantial price increases.” The current level of acquisitions in the sector is also part of the picture, he said.

In fact, one can expect that level to remain high during 2024. One major such acquisition is the takeover of ISS France by Onet, a major operator on the cleaning market. In addition, there are a couple of quite large cleaning companies who are looking for takeover partners.

A difficult economic context

The strong growth the sector has enjoyed for the past several years could be seriously slowed down, if not stopped, during 2024 owing to a complicated economic situation marked by a very high rate of wages and cost increases.

In the context of its struggle with large public clients to have its price increases accepted, the French cleaning federation (FEP) has launched an official ‘Index propreté’, that is, a cleaning services price index which is to serve as a reference for updating or revising cleaning contracts. The FEP has announced the index will be published every quarter.

This initiative is most important given the weight of public sector clients in the business of cleaning companies. Indeed, these clients represent a quarter of that business and are vital for both large groups and small companies, the latter catering for local authorities.

Will the Summer Olympic Games have an impact?

Specialists are expecting that a great number of contracts will be renewed or extended to include new services during the year. This should involve both private companies and local authorities and include the development of new markets for the sorting out and collection of waste.

The Summer Olympic Games in Paris are also part of the picture. Although it’s difficult to know what their impact will be on cleaning companies in the Paris area, whose employees represent a third of all the professional cleaners in France, one can assume that they’ll have to adapt their organisation and travel arrangements during the whole summer.