Social partners agree to raise minimum wage
After protracted differences, the social partners have agreed on a higher minimum wage in Slovakia. Subsequently, the government issued a decree increasing the gross monthly minimum wage from SKK 7,600 (€230) to SKK 8,100 (€245) as of 1 October 2007, despite the fact that the next increment was planned for 1 January 2008. Thus, the minimum wage has risen by 6.6% in 2007; however, its proportion in relation to the average nominal wage has declined.
Previous minimum wage
Up until the end of September 2007, the gross monthly minimum wage in Slovakia was SKK 7,600 (€230 as at 9 November 2007) and the gross hourly minimum wage was SKK 43.70 (€1.33). The Decree of the Slovakian Government No. 540 of 28 September 2006 had raised the previous gross monthly minimum wage by SKK 700 (€21) (SK0611039I). At that time, the minimum wage increased by more than 10% and was SKK 1,850 (€56) higher than the gross subsistence minimum, which was set at SKK 5,750 (€174) on 1 July 2006.
Recent increase
By the Decree of the Slovakian Government No. 450 of 19 September 2007, the gross monthly minimum wage was increased again on 1 October 2007. Contrary to previous years, the latest level of minimum wage was agreed by the social partners involved in the tripartite social dialogue at the Economic and Social Council (Hospodárska a sociálna rada, HSR). After several years of disagreements, the representatives of trade unions and employers were able to agree on a new minimum wage level in Slovakia.
Thus, the monthly minimum wage has increased by SKK 500 (€15) to reach a total of SKK 8,100 (€245). Although the Ministry of Labour, Social Affairs and Family (Ministerstvo práce, sociálnych vecí a rodiny Slovenskej republiky, MPSVR SR) proposed a higher level of minimum wage – corresponding to SKK 8,450 (€255) or SKK 8,260 (€250) – the government adopted the proposal of the social partners. The gross hourly minimum wage rose by SKK 2.90 (eight cent) to reach a total of SKK 46.60 (€1.41). Overall, the minimum wage increased by 6.6% and the gross monthly minimum wage is now SKK 2,176 (€66) higher than the gross subsistence minimum, which was set at SKK 5,924 (€179) on 1 July 2007.
The new minimum wage level corresponds to about 43% of the gross average monthly wage of employees in the economy, which amounted to SKK 18,761 (€568) in 2006. This indicates a decrease of one percentage point in the proportion of the monthly minimum wage in relation to the average monthly wage, compared with the previous year. The new minimum wage thus takes on board the concerns of employer representatives regarding any further convergence between the monthly minimum wage and the average monthly wage in the economy.
Commentary
Representatives of the social partners and government agreed in 2006 that the minimum wage which was valid from 1 October 2006 would expire by the end of 2007. The government promised to adopt a new law on the minimum wage in its Programme Declaration in 2006 (SK0609019I). Generally, changes in the minimum wage take place on 1 January in a given year. However, a delay in the implementation of the new law resulted in the latest increment taking effect in October 2007. The current level of the minimum wage is expected to be valid up to the end of 2008.
Meanwhile, MPSVR SR prepared the draft bill on the minimum wage, which was accepted by the social partners at the tripartite HSR. The government is due to discuss the draft bill soon. The implementation of a proposed new mechanism for setting and increasing minimum wages would allow the social partners and government more room for manoeuvre in negotiations about the level of minimum wages in Slovakia. The draft bill also contains a mechanism for setting the minimum wage level in cases where the social partners and government are not able to agree within the required deadlines.
Margita Barošová, Institute for Labour and Family Research