Government announces Poland’s highest ever minimum wage rise

Government announces Poland’s highest ever minimum wage rise

Poland’s government has announced that the minimum monthly wage will rise by 590 zloty (€125) next year to 3,600 zloty (€763) before tax. That is the highest ever annual increase in absolute terms, while the relative rise of almost 20% is the largest in 15 years.

The hikes – which will see the minimum wage go up 480 zloty in January and a further 110 zloty in July – comes after annual inflation reached a new 25-year high of 16.1% last month and is forecast to remain high this year and next.

While announcing the rise yesterday, Prime Minister Morawiecki declared that his government was “restoring the dignity of work”. Around 3 million of the lowest paid workers are to receive a raise.

“The minimum wage should be a signpost for employers,” added Morawiecki. “The best countries to live in are those where wage inequalities are smaller.”

Government announces Poland’s highest ever minimum wage rise

The planned wage hikes represent an increase of nearly 16% from January and 19.6% from July, compared to the average annual increase of 7.6% since 2015, when the ruling Law and Justice (PiS) party came to power. It is standing for a third term at elections in autumn next year.

Next year’s increase is the highest in relative terms since 2008, when the minimum wage went up by 20.3%. It will also be the first time since 1997 that the minimum wage has been raised more than once a year, something that happens when inflation is above 5%.

The increase proposed by the government is close to the expectations of trade unions, which have called for a minimum wage of 3,500 zloty in January 2023 and 3,750 in July.

Employers, however, have expressed disappointment, pointing out that such an increase will be an additional burden on businesses already struggling with rising costs, for example due to rising energy prices, reports news website OKO.press.

According to economists at mBank, an increase in the minimum wage could also pose a risk of further increasing inflationary pressures, “depending on how the market reacts”.

Analysts at Pekao, another bank, however, suggested that there may still be room for a minimum wage hike in Poland, as “recent years have not confirmed fears that the minimum wage in Poland was rising too fast taking into account falling unemployment rates”.

In June and July unemployment in Poland was at the lowest level since 1990, when the country was beginning its post-communist transition.

Unemployment in Poland lowest since 1990

Main photo credit: Liliana Drew / Pexels

Government announces Poland’s highest ever minimum wage rise