Slovakia agrees a new minimum wage - but it remains controversial

Last week the Slovak employers' associations and trade unions said they've agreed with the Labour Minister's proposal to increase the minimum wage to 238 euros per month. Slovakia has one of the lowest guaranteed wages in the European Union but it is also among those with the lowest number of workers on the minimum age. Despite this the minimum wage is a controversial topic in Slovakia.

Photo: European Commission

Trade unions, which in the past years have been confronted with a steep decline in membership, have lobbied hard for an increase in the minimum wage. Vladimir Mojs, the vicepresident of KOZ, Slovakia's largest trade union, said the agreement will benefit employees.

"It sets a long term strategy for wage policies in sectors where the minimum wage is widespread".

Marian Jusko, the head of one of the largest employers' association- RUZ, seemed please with the agreement too.

"It is an acceptable level for employers. We have also agreed on an amendment that would set January 1st of each year as the date when any changes in the minimum wage will come into effect. This way employers are able to better forecast the evolution of their wage policy".

Photo: European Commission

The minimum wage was previously raised in September last year, three months after the current social democratic government came to power. Then, Prime Minister Robert Fico said such a measure was very necessary as an effective tool to fight poverty in Slovakia. The opposition accused the government of paying lip service to the trade unions that supported Fico's party during elections. Economic analysts such as Viliam Patoprsty from Unicredit Bank Slovakia say that increasing the minimum wage does not really help the Slovak economy, on the contrary it creates problems on the labour market.

"Most economists think that this is a burden because it is a non-market administrative issue. It creates an increase in the average wage, both mathematically and indirectly because people compare among themselves. At the same time it increases the cost of the labour force given the fact that several other social contributions are calculated based on the minimum wage. Self employed people are the most affected".

In terms of the number of people who are earning the minimum wage, Slovakia has one of the lowest rates in the EU, a little under 2 percent. If you have so few people working for the minimum wage, why does the government try to increase it?

Photo: European Commission

"Basically because it is easy to communicat it; it is an instrument of, let's say, political propaganda. And it is clear that it creates pressure on the average wage so based on their [ed.-government] understanding of its impact, it is a neccesary instrument. Slovakia is not alone in the camp of the countries having a relatively low share of people receiving the minimum wage. There are also the Czech republic and Poland".

If the minimum wage goes up, wouldn't companies be temptied to offer the minimum wage so in fact you don't really help workers too much?

"They would have offered the minimum wage which was valid before anyway, if that had been their salary policy. So from this point of view there is no big change".

Prime Minister Robert Fico said that his government wants to push the minimum wage to 60 percent of the average wage. Is it realistic?

"I, personally, don't think this is realistic in this election term".

In the European Union there are twenty states having national legislation which sets the statutory minimum wage. Luxembourg is the most generous with 1,570 euro followed by Ireland and the United Kingdom.