Czech minimum wage to break CZK 20,000 barrier for the first time

The Czech government has confirmed a proposal to gradually increase the minimum wage and link it to average incomes. This plan, which aims to bring the minimum and average wages closer together, would see the minimum wage reach 47 percent of the average wage by 2029. However, the proposal also includes abolishing guaranteed wages, causing disagreement from the opposition and trade unions.

Employers and trade unions support the government's plan to increase the minimum wage but do not agree on the amount. In recent weeks, various groups have been arguing about the exact minimum wage increase rate. Employers wanted a 45 percent increase, while unions pushed for 50 percent. The government has, in recent days, settled on a compromise of 47 percent.

The minimum wage will increase in successive steps, starting from this year's 41 percent and reaching 47 percent by 2029. This would result in a nominal increase from CZK 18,900 (gross) monthly to CZK 20,500 next year. The government predicts an average salary of CZK 48,512 for next year.

The opposition is not satisfied with the proposed increase. Deputy chairwoman of a Freedom and Direct Democracy party parliamentary committee, Lucie Šafránková, said that the party advocates for the minimum wage to reach 50 percent of the average wage in the coming years. Even some coalition members believe that the increase should be more significant. 

Despite some disagreement, coalition politicians believe that their proposed increase is sufficient. Minister of Labor and Social Affairs Marian Jurečka stated that this is the highest and fastest rate of growth for the minimum wage in 30 years and that it will put pressure on the overall growth of wages in the national economy. 

In addition to increasing the minimum wage, the government's proposed amendment to the Labor Code also includes abolishing guaranteed wages, which set the minimum earnings for specific professions in the private sector. Czechia has eight categories of work, in which minimum guaranteed wages range from CZK 18,900 monthly to CZK 37,800. 

Newly, a single number could remain as the minimum wage, discarding guaranteed wages. Some businesses praise these plans, but trade unions also threaten protests because of guaranteed wages.

The coalition hopes to pass the amendment quickly, aiming to implement the changes by July 1 of this year. The Chamber of Deputies and Senate must first approve it before President Petr Pavel greenlights the change.