Government effects minimum wage hike

The Czech government has moved to increase the minimum wage in the country to 12,200 crowns per month effective as of next year. This will meet the government’s goal of raising the minimum wage to at least 40 percent of the average salary.

Illustrative photo: Barbora Němcová

The latest increase of the minimal wage by 1,200 crowns a month is the fourth in succession approved by the three-party government and despite initial reservations from the ANO party, the majority of government ministers voted in favour of the hike. Prime Minister Bohuslav Sobotka of the Social Democrats defended the increase on the argument that it will encourage people to find work rather than staying on the dole and on the grounds that economic conditions for such a move have never been better. The country has the lowest unemployment rate in the EU and steady economic growth that has surpassed expectations. Labour Minister Michaela Marksova pointed out that despite the stable economic growth, wages in the country are notably lagging behind wages in other EU states. Even the minimal wage – currently the equivalent of 421 euros – is lower than that in Slovakia (435 euros) or Poland (453 euros).

The goal of the present government was to reach a minimum wage of at least 40% of the average wage in the country. With the new raise, the minimum wage will be 40.5% of the average salary.

The hike will affect approximately 132,000 people who are currently working for a minimal wage. Most of them are employed in public services, security agencies and various sales outlets.

Not everyone is cheering the move. The opposition centre-right parties would have preferred for the government to lower taxes, while employers say the minimum wage hikes are unpredictable and clear rules for growth in this area would enable them to plan their expenditures better. They moreover argue that an 11 percent hike in the minimal wage does not correspond either to other wage hikes or the country’s economic growth. Whether some of them will lay off employees as a result of the move is as yet unclear.