Government agrees minimum wage rise for 2012

The Slovakian government has stepped in after employers refused to consider union demands to raise the minimum wage. The wage, currently at €317 a month, is one of the lowest in the EU. Unions want the rate increased to €330 for 2012 but employers have resisted any change because rates for more highly skilled workers are tied into the rate. This has led the Ministry of Labour, Social Affairs and Family to propose a new rate of €327 per month, although no final decision has been made.

Background

The minimum wage rate in Slovakia has increased almost four times in nominal terms from €81.3 per month in 1993 to €317 in 2011. As Table 1 indicates, the rate has also increased each year since 2002 in nominal as well as real terms.

Despite this, Slovakia has one of the lowest minimum wages in the EU. Its monthly rate of €317 per month is between three and five and a half times less than in Britain, France, Ireland, Luxembourg, the Netherlands and Belgium, where the monthly minimum wage ranges between €1139 and €1758. However, minimum wages in all the new EU Member States are significantly lower than those in the EU15. The averages for the 11 NMS (not including Cyprus where no data are available) is €341 per month. The wage rates in Slovenia and Malta are twice those of the other NMS and when they are excluded, the Slovakian minimum wage is among the highest in the new member states (Eurostat 2011).

Table 1: Monthly minimum wage development in Slovakia, 2002–2011
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nominal minimum wage (in euros)

163.3

184.9

201.8

215.8

229.0

252.3

268.9

295.5

307.7

317

In terms of real wages

157.8

170.6

187.7

209.9

219.6

247.6

258.8

292.9

305.6

n.a.

Source: MPSVR SR and Eurostat

Talks over minimum wage rates

Social partners discuss the level of Slovakia’s minimum wage every year, and since 1998 the minimum wage has increased each year. The Labour Code provides in Article 120 for minimum wage entitlement according to the difficulty of the work (Table 2).

Table 2: Minimum wage indices
Degree of difficulty of work 1 2 3 4 5 6
Minimum wage index 1.0 1.2 1.4 1.6 1.8 2.0

Source: The Labour Code, Slovak Republic, July 2004

If employee remuneration is not set by collective agreement, the employer has to pay employees at least the minimum wage rate for the job’s degree of difficulty. For instance, given the present basic rate of €317 for unskilled work (degree 1), the minimum wage rate for the most difficult work (degree 6) is twice as high (€634). Employers have often argued against continually increasing the minimum wage because of its knock-on effect on inflation. The government recently decided to exclude minimum wage indices from the Labour Code (SK1105019I). However this decision was reversed by MPs when the bill went through parliament (SK1109019I).

Social partners fail to agree

Negotiations between the social partners and government representatives on the minimum wage rate for 2012 took place at a meeting of the tripartite Economic and Social Council (HSR SR) on 29 September 2011. Employers’ representatives said the existing rate could not be raised because of the poor economic forecast for Europe in 2012. Union representatives argued, however, that Slovakia’s increasing productivity allows room to increase the level by 4.1% to €330.

An amendment to the law on minimum wages (Act No. 663/2007) stipulates that when social partners cannot agree, the rate for the following year has to be proposed by the Ministry of Labour, Social Affairs and Family (MPSVR SR). The ministry has therefore suggested an increase of 3.2% to €327.2 per month, even though the Minister, Jozef Mihál, said he was against such a high increase (Webnoviny.sk, 19 September 2011, in Slovak). Finally, at its meeting on 12 October, Slovakia’s cabinet approved the 3.2% increase in the country’s minimum wage to €327.20, with effect from January 2012.

Ludovit Cziria, Institute for Labour and Family Research

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