The minimum wage will rise by CZK 1,600 to CZK 18,900 from January, a 9.2 percent increase. Four of the eight levels of the guaranteed wage, which is paid according to the difficulty, responsibility and expertise of the work, will also rise. The three lowest steps will increase by CZK 1,600 and the highest step by CZK 3,200. The regulation was approved by the government yesterday. Labour Minister Marian JureÄka (KDU-ÄSL) announced this at a press conference after the cabinet meeting. Trade unions had pushed for a more significant increase in all amounts. According to employers, the minimum wage should grow at a slower pace like other earnings in the Czech Republic and guaranteed wages should be disconnected from it. Prime Minister Petr Fiala (ODS) also agrees.
“The government has confirmed the decree to increase the minimum wage by CZK 1,600. The increase will be the highest in history (nominally). At the same time, we will take gradual steps to meet the goal of gradually increasing the minimum wage in a transparent and predictable manner to a target value of 45 percent of the average wage within five years,” JureÄka said.
Reasonable minimum wages are regulated by an EU directive adopted last year, which member states have two years to put into practice. The regulation recommends minimum earnings at 60 percent of the median gross wage or 50 percent of the average gross wage. The labour ministry originally proposed two options for the increase from January – either by 2,100 crowns or 1,600 crowns. The minimum wage would then gradually rise to either 50 percent of the average wage or 45 percent over the next few years. Last week, the tripartite discussed this, but did not agree. Labour Minister JureÄka then said he would submit a proposal with a lower amount to the cabinet.
Prime Minister Petr Fiala (ODS) thinks the guaranteed wage should not be linked to the minimum wage. He considers it a peculiarity that no European state has, with one exception, he told reporters before leaving for Brussels. “It causes a whole series of problems and it also has an impact on employers,” he said. He also does not consider it fair to compare the minimum wage in the Czech Republic and abroad. The prime minister also pointed out that in many countries, representatives of employees and employers are able to agree on the minimum wage, which he would consider correct, unlike the Czech practice, where the government must ultimately decide.
According to its vice-president Bohdan Wojnar, the Confederation of Industry and Transport respects the government’s decision, even though it has proposed an increase in the minimum wage by no more than CZK 1,000. It also supports the ratio of minimum to average wages at 45 percent, but only if guaranteed wages are abolished. He points to the precarious economic situation of companies and high costs due to energy or raw material prices. The trade unionists insist on maintaining guaranteed wages. Josef StÅedula, the leader of the Czech-Moravian Confederation of Trade Unions (ÄMKOS), has previously said that the efforts to abolish the wages show more of an unwillingness to pay people adequate wages.
According to the regulation, the hourly minimum wage will rise from CZK 103.80 to CZK 112.50 in January. This is a monthly increase from the current CZK 17,300 to CZK 18,900. A worker should get 16,442 crowns net. The lowest earnings should correspond to 41 percent of the average wage next year. Each year thereafter until 2028, the share should rise by one percentage point to 45 per cent of the average wage, according to the plan. It should remain at that level.
For the lowest guaranteed wage, the amounts and increases are the same as for the minimum wage. According to the regulation, the second tier would be adjusted from CZK 17,900 to CZK 19,500 from this year, the third tier from CZK 19,700 to CZK 21,300 and the eighth tier from CZK 34,600 to CZK 37,800 from January. JureÄka said that the increase in guaranteed wages applies to school cooks, janitors, social services workers and cultural workers. He specified that the first three levels of guaranteed wages cover about 1.2 million people, but not all of them have only guaranteed earnings.
Businesses are expected to see their wage costs rise by CZK 5.21 billion next year after the ordered increase, according to Labour Ministry estimates. Employers in the public sector should pay CZK 240 million more. The state should receive CZK 2.16 billion more in social and health contributions.
Regular indexation and the form of guaranteed wages are to be regulated by a forthcoming amendment to the Labour Code. According to JureÄka, it should be adopted in the first half of next year and should be effective from 2025. The number of stages of guaranteed wages should be reduced from eight to four or five.
Source: CTK
