Czech Govt raises minimum wage as of January but delinks others from the minimum

The highest guaranteed wage, which must be double the minimum wage, will increase from CZK 32,400 [EUR 1,338] to CZK 34,600 [EUR 1430] per month. The Government approved the regulation on Wednesday, 21 December.

Czech Labor Minister Marian Jurečka (Christian Democratic Party – KDU-ČSL) made the announcement at the regular press conference after the cabinet meeting. Employers are welcoming the separation of most of the guaranteed wages from the minimum, but unions are criticizing it.

“We agreed upon and decided to raise the minimum wage by CZK 1,100 [EUR 45] to CZK 17,300 [EUR 700]. That is a year-on-year growth of 6.8 %,” the Labor Minister said.

According to Jurečka this decision is responsible as well as social. “There were big concerns among employers that if we were to have done this as in the past, when the Government automatically increased all eight levels of guaranteed wages, we could have caused layoffs,” he said.

According to the Labor Minister, if only the lowest and highest guaranteed wages are to be increased, employers will not come under such pressure from the growth of their expenditure on pay. After the adjustment, next year companies’ expenditures on salaries should increase by CZK 2.1 billion [EUR 87 million], while the state, municipalities and health insurance companies should spend an additional CZK 80 million [EUR 3.3 million].

If all of the guaranteed wages were to be increased, firms would pay between CZK 3.9 billion [EUR 160 million] and 6.4 billion [EUR 265 million] more, while the public budgets would spend about CZK 97.6 million [EUR 4 million], according to the impact report. In hourly terms, the minimum wage will increase from CZK 96.40 [EUR 4] to CZK 103.80 [EUR 4.30].

Guaranteed wages range from the lowest pay to twice the minimum. The lowest monthly wage will grow from CZK 16.200 [EUR 670] to CZK 17,300 [EUR 700].

The highest monthly wage will increase from CZK 32,400 [EUR 1,338] to CZK 34,600 [EUR 1430], which in hourly terms will be CZK 207.60 [EUR 8.60] instead of 192.80 [EUR 8]. The second through seventh levels of guaranteed wages will remain the same as in 2022.

Employers agree with this and welcome the separation of the minimum wage from most of the guaranteed wages. They would prefer less of an increase to the lowest wages.

Smaller firms would favor a growth of between CZK 350 – 500 per month at the most [EUR 14.50 – 21], while the association of industry would favor an increase of no more than CZK 900 [EUR 37] per month. Unions, on the other hand, demanded a CZK 2,000 increase per month [EUR 83].

The unions are also criticizing the plan to not raise most guaranteed wages. According to union chiefs, the Government’s last-minute decision meant that 10 days before the end of the year, neither employers nor employees knew how much would have to be paid as of January.

Several ministries also took exception to the proposal. They pointed out that the job descriptions have not changed for any of the wage levels, which means increasing just two of them could be discriminatory.

The Labor Ministry documentation for the regulation states that the proposal complies with the Labor Code. According to the ministry, the lowest guaranteed wage must not be lower than the minimum wage and the highest must be at least twice the minimum wage.

Different variations of wage increase were calculated for the Government by the Labor Ministry. The increase that would meet the demands of the unions would mean that firms would have to pay between CZK 7.1 billion and CZK 11.6 billion more [EUR 295 million – EUR 480 million] and the public sector would pay CZK 212,800,000 [EUR 8.8 million] more.