Minimum wage in the Czech Republic to rise to 14,600 crowns monthly from January 2020

Prague, Nov 27 (CTK) – The monthly minimum wage is to rise by 1250 crowns to 14,600 crowns as of January, representatives of the Czech government coalition parties, ANO and the Social Democrats (CSSD) agreed today, public Czech Television (CT) has reported.

The government is yet to approve this.

PM Andrej Babis (ANO) confirmed to CTK that the coalition had reached consensus on the rise in the minimum wage.

The trade unions welcomed the rise, though they said it should have been higher, while the employers said a 9-percent rise was too high, did not correspond with reality and might be dangerous for companies.

The minimum wage. which was most recently raised in January 2019, stands at 13,350 crowns a month now. Trade unions demanded its increase by 1,640 crowns, to 15,000, at least, while employers offered a 700-crown increase.

As the Tripartite Council, comprised of the government, trade unions and employers, failed to strike a deal, the decision on the minimum wage level is up to the cabinet.

Deputy PM Jan Hamacek, who is CSSD chairman, said the increased minimum wage would get above the income poverty level. He said it must pay to work. “Czechia cannot remain an island of cheap labour,” Hamacek said.

The Labour and Social Affairs Ministry has drafted three variants of a possible increase by 1,150, 1,350 or 1,650 crowns.

Labour and Social Affairs Minister Jana Malacova has (CSSD) supported the medium rise by 1,350 crowns.

Malacova and CMKOS umbrella union leader Josef Stredula pointed out that the minimum wage in Poland and Slovakia would be higher than in Czechia, even though the Czech economy was more powerful than the Polish or Slovak economy.

The employers argued that the economy is slowing down and small Czech firms cannot afford to increase salaries and they cannot compete with the salaries offered by foreign companies.

Confederation of Industry spokeswoman Eva Velickova said the minimum wage rose far more steeply than the Czech economy, the inflation and the average salary.

She said it is unclear how the government arrived at the level of the minimum wage. She said a clear method of the calculation of the minimum wage that would respect the economic performance and inflation is badly needed.

The Chamber of Commerce said the price of unqualified labour is far away from its real market value. It said the planned increase in the minimum wage would increase the price for customers and cut investment into more effective production, which would increase inflation, labour productivity would not go up without investments and a number of firms would have to sack employees as a result. “We won’t catch up with Western countries by a higher minimum wage but by a higher productivity.

Finance Minister Alena Schillerova (for ANO) previously said the minimum wage increase should correspond to the growth of other wages. She originally supported the lowest proposed rise.

The guaranteed wage, that is the lowest pay according to professional qualification and the job’s character, is also to rise with the minimum wage. It is to increase from the current scope of 13,350-26,700 crowns to 14,600-29,200 crowns as of January.

The Labour Ministry is to prepare the text of the government directive on the minimum wage rise and submit it to the government for approval. Its next meeting is scheduled for December 9.

The government never before decided on the minimum wage rise so late at the end of the year.

In the previous election term, Bohuslav Sobotka’s (CSSD) the cabinet of the CSSD, ANO and the Christian Democrats (KDU-CSL) almost always approved the minimum wage rise in August or September and only once in early October before the previous general election in October 2017. Babis’s cabinet announced the minimum wage rise in mid-November last year.