The Polish Council of Ministers will raise the minimum wage for 2019 by 7.1 percent, after a round of talks with the Social Dialogue Committee, consisting of trade unions and business. The minimum hourly rate of pay will rise to PLN 14.70 (EUR 3.40)
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Currently, the minimum wage is PLN 2,100 (EUR 488), which is equal to 47.3 percent of the average wage forecast for 2018. The minimum hourly rate of pay in 2018 is PLN 13.70 (EUR 3.18). The new rate is set at this level in order to ensure the current relation to average wages is retained, according to Elżbieta Rafalska, the Labour Minister. The rise to 2,250 will take effect as of January 1, 2019, once the appropriate bill has passed through the Polish legislature.
The government’s initial proposal, after an earlier round of talks with the Social Dialogue Committee, consisting of trade unions and business was PLN 2,220 (EUR 511), which was a 5.7 percent increase on last year. This proposal was thrown out by the Solidarity trade union, whose ultimate goal is for the minimum wage to be at least 50 percent of the average wage. The union has announced that it will organise a national round of demonstrations on September 25 in protest at the minimum wage levels. The other main trade union OPZZ has demanded a rate of PLN 2,383 (EUR 554).
According to the Polish statistics office, over 1.4 million people earn the minimum wage. Dr Małgorzata Starczewska-Krzysztoszek of the Polish Economists’ Society told Polish commercial radio station TOK FM that the majority of such workers are employed in micro businesses in the private sector, such as small shops and at market stalls.
Other low paid workers include non-skilled workers in the building trade, although some of these employees may receive a top-up payment under the counter, in order for the employer to avoid paying tax and social security, according to the academic.
The current minimum wage, which is the equivalent EUR 355, compares with EUR 97 in Ukraine, EUR 412 in the Czech Republic and EUR 1,102 in Germany, although the values are subject to currency fluctuations.
Polish administrators have made great efforts to discourage employers from taking on staff on zero-hour contracts and other forms of less formal employment over the past few years, but the practice still persists. The median earnings of Poles, which are announced once every two years, last year amounted to EUR 526, compared to EUR 682 in the Czech Republic and over EUR 1,700 in Germany.
source: TOK fm, Poland In English
For businesses, the extra amount they will need to pay an employee on minimum wage is not PLN 150 (EUR 35) but PLN 180 (42 EUR), once additional social security charges are taken into consideration.
Polish companies have been loathe to raise prices, despite average wages increasing up to seven percent on an annual basis in some months of this year. Eventually, if there is no significant increase in productivity, higher wages will lead into higher inflation, which is currently at 2.0 percent.
However, the Polish labour market is not in a vacuum. Germany is still an attractive market for Poles to go to work in and the minimum wage there is more than double Polish rates. With keeping the labour force at home a key factor, and no doubt with half an eye on the approaching local elections in late October, the government had little choice, especially when Solidarity was threatening protests.