Club 500 that associates businesses with over 500 employees said that it was disappointed by the government’s decision to raise the minimum wage from the beginning of next year from the current EUR520 to EUR580, local media reported. Club 500 executive director Tibor Gregor underlined that they had nothing against raising the minimum wage itself, but that they perceived as problematic the linking of the minimum wage to 42 other legal regulations, in which Slovakia is unique in the. According to him, with a higher minimum wage many other wage related payments are also growing, thus disproportionately increasing the labor costs for employers. Gregor underlined that at a time of slowing European and Slovak economy, such a measure threatened competitiveness of Slovak industry. He also noted that by approving the 11.5% minimum wage hike, the government has fully rejected all proposals by employers for a hike to only EUR552.
Recall that the central bank has previously warned that the planned minimum wage hike could negatively affect employment developments and jeopardize competitiveness, especially in regions with higher unemployment and lower wage levels, especially in view of the already seen cooling of the economic activity and intensifying negative risks. Overall, such an administrative measure, in addition to the approved high bonuses for night and weekend work, as well as the introduction of 13th and 14th salary, will additionally increase the labor costs of local firms, thus reducing their price competitiveness and increasing the pressures on their profit margins, especially in view of the slowing down domestic and foreign economic activity, and mounting risks stemming from the external environment, in our view.