Ministry of Labour Proposes To Peg Minimum Wage to At Least Half the Average Wage

The new proposal, to go into effect from 2022, would see the current minimum wage increase by 17% from CZK 14,600 to CZK 17,100, which would benefit around 140,000 people. The proposal still has to go through consultation and debate stages. Photo credit: CG / Brno Daily.

Czech Rep.,  Aug 24 (BD) – The Ministry of Labor has proposed that the minimum wage should correspond to half the average wage of the previous year. The amendment would go into effect from 2022. If applied in 2021, this would mean an increase of CZK 2,500 or 17% on the current minimum wage. Comments on the proposal must be submitted by the second week of September.

According to the amendment, the minimum wage should always be half the average gross wage from the year before last from the beginning of January to the end of December. The Ministry of Labor would announce the new amount for the next year by the end of October. If the average wage decreased, the minimum wage would remain the same. If the gross domestic product (GDP) fell in the first or second quarter, the minimum wage would not have to rise next year and the government could keep it the same.

The original proposal, which was to be included in the amendment to the Act on the Change of Salary of Constitutional Officials and Judges and the Labor Code, was drafted two years ago by Labour Minister Jana Maláčová (ČSSD). This attempt failed due to opposition from employers, as no agreement could be reached between them and the unions, who supported the change.

According to the Ministry of Labor, raising the minimum guaranteed wage would strengthen purchasing power. Photo credit: Freepik.

According to CTK, employers have been calling for a clear and predictable formula for the minimum wage for a long time, and have previously supported the link to average earnings, although not at the percentage suggested. Before the coronavirus crisis, employers said that the share should not exceed 40 percent, which unions say is not enough. The head of the Czech-Moravian Confederation of Trade Unions [“Českomoravská konfederace odborových svazů”], Josef Středula, suggested 50 or 48 percent of the average wage, and working up to this level gradually over a few years.

According to the Ministry of Labor, raising the minimum guaranteed wage would strengthen purchasing power and demand for companies’ products. The budget revenue from levies and taxes would also increase. The documents currently do not, however, include predicted costs of the wage increase for the state and employers. 

The minimum wage this year is CZK 14,600 – about 46% of the previous year’s average wage. The Ministry stated that according to the new model, the minimum wage in 2021 would increase to CZK 17,100. According to the Ministry, about 140,000 employees received the minimum wage last year.

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