The Chamber supported the amendment to the Labor Code with the valorization of the minimum wage

Commercial presentation Update: 2/05/2024 19:23
Issued by: 05/02/2024, 15:31

Prague – The minimum wage should rise to 47 percent of the average wage by 2029. It is now at 41.1 percent and has grown to 18,900 crowns since January. From next year, guaranteed wages according to expertise, responsibility, and the difficulty of work should only apply to the public sector, not to companies. The amendment to the Labor Code, which was discussed by deputies today in the opening round, takes this into account. Unions want to complain to the European Commission about the abolition of the guaranteed wage in the private sector. The opposition movements ANO and SPD failed with their proposal to return the draft to the government for further elaboration. Some opposition speakers expressed fear that the government coalition would want to include in it the possibility of termination by the employer without giving a reason.

Minister of Labor Marian Jurečka (KDU-ČSL) said in front of the deputies, in response to concerns about the dismissal without reason, that the opposition speakers speak at length about a topic that is not in the draft.

SPD MP Lucie Šafránková justified the proposal for return to the government by saying that the government’s proposal for valorization is vague and allows for different ways of implementation. ANO’s shadow labor minister Aleš Juchelka said, among other things, that the mechanism for automatically increasing the minimum wage is slow. He also had reservations about the abolition of guaranteed wages in the private sector and pointed, among other things, to the decline in real wages due to inflation. He also doesn’t like the fact that the public sector will be left with only four levels of guaranteed pay instead of eight.

Juchelka warned against a possible attempt by some coalition MPs to insert a termination by the employer without giving a reason into the code. According to him, employers would thus be pulling the long end of the rope. The vice-chairman of the economic committee, Martin Kolovratník (ANO), said that this is an antisocial and immoral idea. The chairman of the ANO club, Alena Schillerová, also joined the criticism. Among other things, she described the draft as unbalanced, insufficiently discussed and poorly timed.

In April, the new vice-president of the ruling ODS, Eva Decroix, spoke about the introduction of the possibility of immediate dismissal with severance pay of up to eight months’ salary. According to the deputy, the ODS would like to promote this topic in the negotiations of parliamentary coalition formats, which, according to Decroix, could result in a solution acceptable to all. The National Economic Council of the Government (NERV) mentioned this change earlier, when it mentioned the modernization of the Labor Code as one of the steps to support economic growth. Jurečka had previously said that he would not support such a proposal without further related changes.

According to the amendment, the minimum wage in the Czech Republic should gradually reach 47 percent of the average wage by 2029. Now it’s at about 41 percent. The guaranteed wage, which represents the lowest earnings according to the expertise, demandingness and responsibility of the work and which is paid in eight stages from the minimum wage to double it, should be abolished in companies from January. She should remain in the public sector, but in four steps from the minimum wage to 1.6 times it.

Adequate minimum wages are regulated by the EU directive from the year before last, which member countries have to put into practice by mid-November. The regulation recommends a minimum income of 60 percent of the median gross wage or 50 percent of the average gross wage. The minimum wage has increased by 1,600 crowns to 18,900 crowns since January, and according to the Ministry of Labor, it corresponds to 41.1 percent of the average gross earnings that were predicted for this year. According to an earlier statement by the Minister of Labor, Marian Jurečka (KDU-ČSL), the minimum wage should grow by roughly the same percentage every year until 2029, and next year it should reach 42.2 percent of the average wage.

The calculation of the minimum wage should be based on the predicted average wage for the next year, which the Ministry of Finance would announce by the end of August. The government would set a coefficient that would take into account purchasing power, the cost of living, the level and rate of wage growth as well as productivity developments. The Ministry of Labor would then set the minimum wage for the next year by the end of September. It would be calculated as the product of the expected average earnings and the coefficient. However, if there was a risk that the newly announced minimum wage would be lower than the previous one, the most recently announced minimum wage would be used

Instead of eight guaranteed wages, four should be paid, but only in the salary area. They should range from the minimum wage to 1.6 times it. According to the government, the current legislation is problematic, employers criticize it, and according to the findings of the labor inspectorate, employers often do not even know about the obligation of a guaranteed wage.

Czech Republic House of Economy meeting