If we want to start talking about next year’s minimum wage increase, we first need to look to the past. As we all know, 2020 was the year of the pandemic, and that brought with it, among other things, a significant downturn in the economy, and with it a fall in labor productivity. The private sector responded logically by reducing the growth in average wages. But not all businesses had this option.
The general objective of the Directive is to ensure that all EU workers are protected by minimum wages, which is essential to guaranteeing adequate working and living conditions regardless of the place of work or residence.
The European Commission has proposed options for possible EU action addressing the challenges related to fair minimum wages in the EU. The initiative has a general objective to ensure that all workers in the EU are protected by fair minimum wages, allowing for a decent living wherever they work.
The current Vice-President of the European Commission Mr. Timmermans openly says that a minimum wage of 60% of the median wage should be paid in the EU. In addition, the European Commission launched consultations with trade unions and employers on EU minimum wage rules in January.
In Slovakia, the minimum wage has become a political evergreen of every autumn. However, its growth has been rapidly increasing in recent years. Moreover, the former Slovak prime minister has proposed a new law, which will set the minimum wage at 60% of an average wage of the previous year.
The ruling politicians are unfortunately going in the opposite direction. While a person working for a minimum wage in 2015 paid 29% in taxes and levies, with the planned minimum wage, they will pay more than 40% next year.
A minimum wage problem is a thought experiment that is not easy to comprehend. The fact is that people are different. Some people create enormous wealth and others do not produce much. If their added value or created wealth in a month does not reach the minimum wage, the government forbids them to work.
There is evidence showing that increases in mandatory minimum wage might force some firms to increase prices, lay off workers, cut fringe benefits for employees and engage in other revenue-boosting or cost-cutting measures.
On December 7, 2017, the Ukrainian Parliament had the day of Budget-2018. During one day, the Verkhovna Rada amended the Budget Code and Tax Code, as well as adopted the State Budget Law for 2018. The decisions were taken in a very non-transparent way with changes approved from the voice.