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Tuesday, July 16, 2024

Minimum wage 2025. Government proposal. SME spokesman warns

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The government's proposal to increase the minimum wage by 7.6 percent in 2025 is bad news, says Adam Abramowicz, the Ombudsman for Small and Medium-sized Entrepreneurs. He adds that the rapid pace of increases will bring many negative effects, including passing on rising employment costs to product prices.

Increase the minimum wage level by almost twice the expected increase inflation this is a road to nowhere, entrepreneurs will have to bear the consequences of government decisions, and ultimately employees as consumers will also lose, because the increase in labor costs must be passed on to the increase in prices – wrote the Ombudsman in his position.

On Thursday, the government adopted a proposal for the minimum wage and salary minimum hourly ratewhich are to apply in 2025 from January the lowest salary is to be PLN 4,626 gross. This means an increase of PLN 326 and 7.6%. in relation to the amount applicable from July 1, 2024 – PLN 4,300.

Abramowicz pointed out that for micro and small companies, the decision of the Council of Ministers is another bad news, it means that minimum wage will be around 53%. predicted average salary, and this is one of the highest indicators in Europe. According to the Ombudsman, the radical increase in the level of the minimum wage in recent years was difficult to bear, especially for the SME sector, especially since it obviously also resulted in a cascading increase in the rest of the wages.

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Read also: “This will be devastating for thousands of retail establishments.”

Minimum wage in PolandPAP/Maciej Zieliński

Minimum wage increase – negative effects

He also pointed out that the significantly faster rate of increase in the minimum wage in relation to the increase in productivity has a number of negative effects on the economy. The most obvious one is liquidation of thousands of companies or escape into the gray zone. The minimum wage level is too high in relation to the average wage, resulting in employment reductions, especially in poorer regions of the country, the Commissioner enumerates.

According to him, another negative side effect is the migration of employees from small towns to large cities, because it is in smaller centers that jobs disappear most quickly.

Abramowicz listed one of the negative consequences as flattening wages. The earnings of people working in less responsible positions are approaching the earnings of those with greater responsibility. In this way, the motivation to work and improve qualifications is undermined, he said.

He also reminded that the level of average remuneration is calculated on the basis of the remuneration of employees in the corporate sector. If we took into account remuneration in micro and small companies or in the public sector, the data on the real level of earnings would be much lower – said the Commissioner.

Main photo source: Shutterstock

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