Government agrees on minimum wage of 11,000 crowns

The three parties in government have agreed to boost the country’s monthly minimum wage from the current 9,900 to 11,000 crowns (around 400 euros). The boost is the third over a relatively short period aimed at improving the pay for around 115,000 workers. The move will cost employers an additional 3.5 billion crowns in salaries and critics have warned the hike could lead to layoffs.

Illustrative photo: Tomáš Adamec

The Sobotka government of the Social Democrats, ANO and the Christian Democrats approved on Wednesday a proposal to boost the country’s minimum wage by an additional 1,100 crowns to a total 11,000 crowns (around 400 euros) per month. The move was confirmed by the prime minister on twitter, who said that “Working has to pay off. Wages should rise still more in the future!”

The latest hike is in fact the second rise already in 2016; at the beginning of the year the minimum wage was 9,200 crowns, and will satisfy proponents like Labour and Social Affairs Minister Michaela Marksová but perhaps not entirely satisfy the unions who had been seeking a boost 500 crowns higher. But union representatives may be placated by the fact the government in the coming year wants to raise the minimum wage yet again. The aim is it to mirror two-fifths, or 40 percent, of the average monthly wage.

Following Wednesday’s decision, it is a step closer at roughly 38.2 percent. In other terms, those working for the official minimum wage will now be earning 66 crowns per hour. Those earning the meagre wage will no doubt welcome the rise but others, namely employers are less than happy. They will have to pay out an additional 3.5 billion in salaries and some have long warned that could lead to layoffs. Jan Wiesner is the head of the Confederation of Employers’ and Entrepreneur’s Association of the Czech Republic:

Jan Wiesner, photo: archive of Radio Prague

“I think it will have an impact on businesses. In our negotiations with the government we pushed for the rise to be to around 10,600… Many employers already have collective contracts which are higher, but we think this will impact smaller firms.”

Mr Wiesner explained that companies such as sub-suppliers might not have the leeway to meet the higher minimum wage and that such firms needed help to re-structuralize, needed help in R&D, and cooperation with universities. And, Mr Wiesner made clear the confederation would continue to oppose plans to further boost the minimum wage as promised by the government.

“We will continue to be against. Raising the minimum wage should be in balance with economic growth, the GDP and productivity. It is alright to raise it across the board for state employees, where they receive the same pay regardless of performance but you can’t do that in industry and business.”