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Minimum wage 2024. How much will it be? Calculations of the Federation of Polish Entrepreneurs

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The minimum wage in 2024 may increase by about PLN 700 gross per month, i.e. 20 percent year on year, according to calculations by the Federation of Polish Entrepreneurs (FPP). The organization announced that the statutory minimum wage required next year will be PLN 4,254.40, and the minimum hourly rate – PLN 27.80.

Experts of the Federation of Polish Entrepreneurs prepared calculations based on the forecasts of key macroeconomic indicators included in the Multiannual State Financial Plan for 2023-2026 recently adopted by the Council of Ministers. As explained, such a significant increase minimum wage is largely due to the mechanism of verification index that compares inflation forecasted in the past with actual recorded values.

“Currently, forecasts for 2022 are being verified. In the state budget for this year, the government assumed that the annual average inflation will be 3.3 percent. The data published by the Central Statistical Office show that in fact the average annual inflation in 2022 was at the level of 14 .4 percent.” – indicated.

As it was added, in accordance with the adopted interpretation of the provisions of the Minimum Wage Act, “as a reference point for calculating the minimum wage adjusted by the verification index, FPP experts took into account the average value of the minimum wage for 2023”.

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Minimum Wage 2024

According to FPP calculations, the statutory minimum wage level required in 2024 will amount to PLN 4,254.40, and minimum hourly rate – PLN 27.80″. “Compared to the average annual level of the minimum wage in 2023, this means an increase of as much as 20 percent” – we read. The organization wrote on Twitter about a record increase in the minimum wage in 2024.

The FPP pointed out that an employee earning the minimum wage would receive an average annual increase of PLN 709.40 gross in his monthly salary.

Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs, pointed out that “in theory, the verification index serves to compensate employees for the effects of inflation in the event that it turns out to be higher than expected. In fact, however, such compensation took place earlier, because last year the government set a much higher the level of the minimum wage than it resulted from the statutory algorithm.

From January 1, 2023, the minimum wage increased to PLN 3,490 from PLN 3,010 gross. On the other hand, from July 1. the minimum wage will be PLN 3,600 gross. This means an increase of 15.9 percent. since January and by 19.6 percent. from July on a year-on-year basis.

“However, the mechanisms provided for in the act do not take this into account, which leads to the phenomenon of double compensation of price increases in the minimum wage. According to all expectations, the year 2024 should be a time of disinflation, when all nominal dynamics of economic indicators decrease – and the fastest of them, of course, An increase in the minimum wage by as much as 20 percent does not seem to meet these conditions – especially since, in accordance with the statutory provisions, it will have to be repeated twice – in January and July,” Kozłowski indicated, quoted in the communiqué.

In the opinion of the chief economist of the FPP, “this indicates the need to introduce significant changes to the more than 20-year-old act on the minimum wage for work”. “The right direction would be to stabilize the minimum wage at the level of 50% of the average wage, so that the statutory algorithm would not be the cause of changes disrupting the balance on the labor market and economy” – emphasized Łukasz Kozłowski.

Main photo source: Shutterstock

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