The automatic mechanism for setting the minimum wage is being abolished
The Cabinet is considering an option where the minimum wage would vary by industry and be negotiated by unions and employers, rather than unilaterally by the state
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Simona Gotsova The Ministry of Labor and Social Policy (MLSP) is working on developing a new mechanism for determining the minimum wage. Currently, it is 50% of the national average, but Social Affairs Minister Natalia Efremova stated that an option is being sought to have it negotiated with unions and employers by sector, rather than determined unilaterally by the state.
Wages are a measure of labor. It is not a good idea for the mechanism to be automatic. It is not a good idea for the state to set the minimum wage when we have a functioning market economy,” Efremova commented.
The current idea is for the minimum wage to be negotiated by sector between unions and employers based on specific criteria, taking into account inflation and labor productivity, with the Ministry of Social Affairs acting as a mediator.
We will seek a joint approach with the social partners on how to set this minimum wage – not unilaterally by the state,” added Efremova.
We would like to remind you that the topic of the minimum wage formula is one of the most frequently discussed in recent years, with a number of economists, including the Fiscal Council, having repeatedly warned of the need to change the current formula. The reason: such automatic mechanisms are procyclical, and their removal would act as an anti-inflationary measure.
Translated with DeepL.
