Minimum Wage Increasing to 13.700 CZK?

This year again, talks about increase of the minimum wage have appeared; the minimum wage has been increased to 12.200 CZK since January 1st, 2018. Unionists now propose an increase to 13.700 CZK. The previous Government had already promised the minimum wage to be more than 40% of the average wage. There are currently 132 thousand employees making the minimum wage (i.e. 3,6% of employees). The institute of the minimum wage is laid down in the Labour Code, specifically in Section 111. 

What effects could an increase of the minimum wage have next year? The increase of minimum wage will affect parents, children, but also pensioners. Together with the minimum wage, the limit for the possibility of applying for a tax bonus will be higher too. This limit is six times the minimum wage, i.e. in case the increase is approved it will be 82.200 CZK. At the same time, the limit for income in the form of pension free from taxation would be set at 493.200 CZK (41.100 CZK per month), that is 36 times the minimum wage. The change would affect even people without taxable income because they would have to pay higher amounts of health insurance levies (13,5% of 13.700 CZK, that is 1.850 CZK, while this year it is 1.647 CZK). Even people employed part time and with income lower than the minimum wage, would have to pay this amount of health insurance. Increase of minimum wage will have an effect on people registered with the employment institutions who will be able to make only 6.850 CZK, that is, no more than half of the amount of the minimum wage. The increase of the minimum wage is also linked to the increase of the guaranteed wage, divided into 8 categories gradually based on the complexity, responsibility, and strenuousness of the job. 

However, economists warn that an increase of the minimum wage usually has a negative impact on employees themselves since the increase leads to less working hours offered by the employer and sometimes dismissals.