Polish PM signs into force 8.1% rise in minimum wage to PLN 2,000 for 2017

Polish PM Beata Szydlo said she signed a directive that will raise the statutory minimum wage by 8.1% to a gross PLN 2,000 per month for 2017, according to a move contained in a tweet. The minimum wage will rise from PLN 1,850 this year. The government now assumes that CPI deflation will be 0.5% this year before inflation will be 1.3% next year. The proposed increase is thus much faster than inflation or any likely measure of productivity growth (~2-3%).

The PLN 2,000 a month will comprise some 47.04% of the average salary in the national economy, Labour and Social Policy Minister Elzbieta Rafalska said in a statement. This will bring the wage closer to 50%, she said. “The good situation on the labor market should also be reflected in wage growth,” she added.

Overall, the minimum wage hike will add to the risk of general wage pressure in a situation in which the labour market has tightened and the unemployment rate has fallen to long unseen levels. Nominal wage growth in the business sector has so far remained relatively moderate, perhaps helped by a greater inflow of Ukrainians. But it does seem likely wage pressures will mount as the labour supply remains low, also possibly limited by women leaving the labour force due to the Family 500+. Such labour market dynamics are likely to help keep the Monetary Policy Council opposed to policy easing.

 

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