Czech labor ministry proposes 10.1% minimum wage hike

The labor ministry proposed that the minimum wage rises by 10.1% to CZK14,700 in 2020 from CZK13,350 in 2019, minister Jana Malacova (leftist junior ruling CSSD) informed after her meeting on Tuesday with trade unions. She noted that the proposed CZK1,350 hike in the minimum wage will help cover the rising costs of living and reduce the budget spending on social benefits. However, unions have insisted that the minimum wage is hiked by 12.4% or CZK1,650 to CZK15,000. Malacova admitted that the proposal for a minimum wage hike is yet to be discussed by the leaders of ANO and CSSD. FinMin Alena Schillerova commented that she preferred raising the minimum wage as a way to preserve the proportion between it and the average wage, which is 40% now, which means that the minimum wage growth should therefore copy the growth of the average wage. She said, nevertheless, that she would primarily like the further minimum wage increase to be agreed upon by the representatives of the employees and employers, adding that the government should interfere in the negotiations only if the social partners fail to reach agreement.

Note that the social partners — government, employees and employers, are to meet over the pay rise issue on Sep 9 and over the 2020 draft state budget a week later. The unions link the debate on a pay rise with the issue of the monthly minimum wage, which about 150,000 workers receive in the 10.6 million Czech Republic. The government can raise the minimum wage by a directive. In recent years, it has done so annually as of January. Between January 2014 and January 2019, the monthly minimum wage rose by CZK4,850, which is 60%, which means that the increase was steeper than that of other wages. Nevertheless, the unions point out that the net minimum wage has been below the level of poverty. At the same time, the Czech Industry Confederation proposes up to 5% or CZK700 increase in view of the economic slowdown, while the Chamber of Commerce recommends that the minimum wage not be increased at all.

With regard to the wages of civil servants, Malacova said that the unions also seek further talks on her proposal that the civil servants wages are raised by 5.2% next year that correspond to the GDP growth and cover inflation, which is still above the proposal of FinMin Alena Schillerova (for senior ruling ANO) for 3% hike. The two big umbrella union organisations, CMKOS and ASO, differ in their demands for the rise of wages in the public sector. CMKOS demands a 15% pay increase for teachers, 10% for the school non-teaching staff and medical workers, and 8% for the other professions. It also seeks the abolition of the pay brackets for the worst-paid professions, which would benefit the workers in branches such as culture and social services. ASO, too, supports a steeper increase in the pay of the worst paid professions. Together with CMKOS, it points out that many of the lowest pays are even lower than the minimum wage and therefore sees 5% hike as unacceptable. Schillerova said she was ready to negotiate about this. In the meantime, school workers’ union wants further negotiations about a steeper pay rise than the government-planned 10% for teachers and 7% for non-teaching professions, its chairman Frantisek Dobsik said after meeting education minister Robert Plaga (ANO) on Tuesday. Plaga said he did not plan to further boost the planned increase, which Dobsik called not sufficient for improving the quality of Czech schools.

Note that last year, 640,700 people worked in civil service — teachers, firefighters, medical workers, clerks, police and other professions. Their average gross monthly pay reached CZK35,437, a 10.8% y/y increase. They saw their wages rise again in January 2019, when the base pay was increased by 2-7% for various professions and by 10% for teachers. A large sum was also earmarked for bonuses.

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