Will Minimum Wage Increase Hurt Small Business? (Radio Prague)

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GOVERNMENT APPROVES MINIMUM WAGE HIKE FOR 2019

Daniela Lazarová  20-11-2018  Print Subscribe to RSS

The Czech government will increase the minimum wage by 1,150 crowns to 13,350 crowns a month from January 2019, Labour and Social Affairs Minister Jana Maláčová tweeted from an early morning cabinet meeting on Tuesday.

Photo: Klára Stejskalová

Photo: Klára StejskalováThe minister noted that it was the second highest increase of the minimum wage since 1991. “This is not just good news for the 150,000 people who work for a minimum wage (around 4 percent of the work force) but for all employees since a growth in the minimum wage will inevitably influence wage growth in general” she wrote. Achieving this hike was one of the Social Democratic Party’s policy program priorities. 

Alena Schillerová, photo: Filip Jandourek, Czech Radio

Alena Schillerová, photo: Filip Jandourek, Czech RadioFinance Minister Alena Schillerová, from the ANO party, was far less enthusiastic. Speaking to journalists after the cabinet meeting, Schillerová said she had abstained from the vote since she saw no reason for the minimum wage to grow faster than the average wage for several years in succession. She said she would have preferred a 1,000 crown increase which would have reflected the average wage growth and argued that the hike would negatively impact employers since it would increase companies’ costs. 

Employers have already protested against the move, as has the Association of Cities and Towns and the Ministry of Education, which is demanding more money from the state budget to cover the costs. 

The aim of the former Social Democrat-led government was to reach a minimum wage of at least 40 percent of the average market wage and the Social Democrats in this ruling coalition have come close to that goal and set themselves a new target – to ensure that the minimum wage comes close to 16,000 crowns by 2021, when the government’s term in office ends. Prime Minister Andrej Babiš from ANO recently spoke of wanting to reach a minimum wage of around 15,200 crowns by that time. 

Last year the minimum wage amounted to 37.3 percent of the average wage. This year it should be 38.2 percent. 

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