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PM says minimal wage to be CZK 11,000 in 2017

29 December 2015

Prague, Dec 28 (CTK) - The minimal wage in the Czech Republic should rise to at least 11,000 crowns in January 2017 from 9900 crowns to which it is be raised as from January 2016, server reported on Monday referring to Prime Minister Bohuslav Sobotka´s (Social Democrats, CSSD) plans for next year.

The minimal wage next year will be 700 crowns higher than this year.

However, a recent analysis concluded that a high rise in the minimal wage can also have negative impacts.

The Confederation of Industry said further raising of the minimal wage is a "pre-election populist step."

Regional elections and elections to one third of the Senate will be held in the country next autumn.

"We will have an important debate on the further growth in the minimal wage. In my opinion, it should rise to minimally 11,000 crowns per month gross if we are to fulfill a commitment contained in our policy statement," Sobotka said.

The government pledged in the coalition agreement and its policy statement to gradually bring the minimal wage close to two fifths of the average wage.

The centre-left government is comprised of the CSSD, ANO and the Christian Democrats (KDU-CSL).

According to the statistics, the average wage amounted to 26,072 crowns in the third quarter of the year. Two fifths of the sum equal 10,429 crowns.

The government decided to raise the minimal wage by 700 crowns, from 9200 to 9900 crowns as from January 1. Trade unions demanded an increase of 1000 crowns, while employers spoke about 500 crowns.

Trade unions said recently the government will not fulfil its promise if it continues to raise the minimal wage at the current pace and that it should explain it to voters.

The Confederation of Industry rejects any further raising of wages.

Its chairman Jaroslav Hanak said the minimal wage should go up depending on the development of the average wage and GDP. He said the raising of the minimal wage should be set so as to prevent its abusing for political goals.

Labour and Social Affairs Minister Michaela Marksova (Social Democrats, CSSD) said previously the minimal wage must grow more than up to now.

She said the difference between the minimal wage and welfare benefits must deepen so that it pays people to work.

Marksova said the current proportion of the minimal wage to the average wage is "one of the Czech Republic´s shames."

Sobotka said recently the government can use a marked raising of the minimal wage to press for a more robust increase in the minimal wage which would allow a more palpable growth in other wages.

This is exactly what employers alerted to previously because other wages must be raised if the minimal wage is increased. The employers complained that some branches have only been recovering from the crisis and that they do not have money for a marked pay rise.

According to an analysis trade unions have had worked out, the lowest-category wages are rasing most quickly if the minimal wage is raised. On the other hand, the higher incomes of the qualified workforce are rising more slowly, which diminishes the wage differences between the qualified and unqualified workers.

Analysts said some employees perceive this as an injustice, which can lead to a drop in their productivity and consequently a lower performance of the whole firm.

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