Social partners reach agreement on minimum wage for 2009

In July 2008, the Polish Tripartite Commission decided to increase the national minimum monthly wage by 13%, to PLN 1,276 (about €381) from 1 January 2009. In contrast to the stalemate in the minimum wage negotiations last year, which resulted in raising the minimum wage by governmental decree, this year the social partners were able to reach common ground. The agreed increase corresponds to 40% of predicted average national pay in 2009.

Impact of booming economy on minimum wage

In recent years, Poland’s economy has been growing at a fast rate. The economic boom has been reflected in shrinking unemployment and rising wage pressure. Not surprisingly, the latter trend has affected the national minimum wage: in the autumn of 2007, on the eve of parliamentary elections, the government concluded a separate agreement with the Independent and Self-governing Trade Union Solidarity (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność), stipulating that the gross minimum monthly wage would be raised by almost 13%, from PLN 936 (about €279 as at 3 September 2008) to PLN 1,126 (€336) as of 1 January 2008 (PL0709019I). Prior to this move by the government, the Tripartite Commission had failed to reach agreement on increasing the minimum wage, and as a result the decision was put into the government’s hands, in accordance with the Minimum Wage Act.

New minimum wage rate agreed

In 2008, the negotiations in the Tripartite Commission on the minimum wage could again be described as stormy; however, unlike last year, the social partners were successful in reaching a consensus. The government originally offered to increase the minimum monthly wage to PLN 1,204 (about €359). The employer side seemed ready to accept this offer, but the trade unions were hoping for a more substantial increase. As a result, the government raised its offer, and on 15 July the Tripartite Commission adopted Resolution No. 33, by virtue of which the national minimum monthly wage will increase by 13% to PLN 1,276 (€381) from 1 January 2009 – this corresponds to 40% of predicted average national pay for 2009.

Difficulties in reaching agreement

The final compromise proved difficult to achieve, as the social partners’ initial positions had differed significantly. Trade unions demanded an increase in the minimum wage to 50% of predicted average pay in 2009. Had the unions’ expectations been realised, the minimum monthly wage in 2009 would have amounted to PLN 1,595 (about €476). The trade unions firmly refused to accept the government’s original offer, arguing that the proposed increase of PLN 78 (€23) would in fact reduce the minimum wage to 38% of average pay – currently, the minimum wage represents 42% of average pay. The employee side also reiterated that the issue of raising the minimum wage to 50% of average pay had been repeatedly addressed in the parliamentary debate on the minimum wage.

On the other hand, the employers, while not entirely dismissing the idea of an increase, would rather see the minimum wage grow at a slower pace. In other words, the employer side adhered to the same line of argument as in previous years. First, they pointed to the fact that such a considerable increase would serve as another factor in boosting wage pressure, thereby increasing the risk of accelerating inflation. Secondly, the employers emphasised the negative impact of the Tripartite Commission’s decision on the national budget, since the group of employees who will actually benefit from the increase mainly consists of public sector staff. Thirdly, they expressed their concern that an overly high minimum wage would discourage employers from hiring newcomers to the labour market and would result in pushing a large number of low-skilled workers into the shadow economy. It should be noted that, in the case of a young person undertaking employment for the first time, the reduced rate of 80% of the regular minimum wage applies during the first year of work.

Nevertheless, the social partners were able to overcome the disparity between their original positions. The compromise was sealed by incorporating into Resolution No. 33 a statement in which the signatories declared their willingness to continue efforts towards the establishment of ‘systemic arrangements regarding pay, minimum wage included’. Thus, this leaves the door open for an incremental change in the minimum wage level in the direction of the target of 50% of national average pay in the coming years.

Jan Czarzasty, Institute of Public Affairs (ISP)

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