FOR Message 17/2018: Nobody gains in the bidding for minimum wage raises
- The Ministry of Family, Labor and Social Policy proposes to return to the harmful policy of the PiS government from 2016-2017: the stepwise increases in the minimum wage(14.3% in total). In 2019, the minimum wage would increase from the current PLN 2100 to 2250. This raise (7.1%) would be higher than the forecasted increase in whole-economy wages (5.6%). The Ministry of Finance rightly blocks this move. The amount of the minimum wage determined by law is PLN 2217, giving (5.6%) the same increase as in the whole economy.
- The round figures of the minimum wage postulated for subsequent years by the Ministry of Labor and Social Policy (PLN 2000, PLN 2100, PLN 2250 ...) indicate a PR exercise rather than calculations from the projected rate of wage growth in the economy. This is why, for instance in the UK, an apolitical commission determines raises of the minimum wage.
- The minimum wage in Poland is already high in comparison to other, richer than Poland, countries of the European Union and the OECD. In 2017, the ratio of Poland’s minimum wage to the productivity of an average employee was the sixth highest in 39 EU and OECD countries. In 2002-2013, the increases in the minimum wage were reducing employment in Poland by approx. 116 thousand jobs a year.
- The cost of raising the minimum wage is borne by the weakest workers, in particular those with lesser professional experience, weaker education, and lower wages. Some of them are pushed out of legal employment into the gray economy or even professional deactivation. The minimum wage increases rarely have significant adverse effects for the entire economy, because they concern a narrow group of employees with the lowest wages. However, empirical studies abroad confirm that subsequently the employment in this group significantly decreases.
Rafał Trzeciakowski, economist
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