What are the entrepreneurship council’s recommendations on the minimum wage?
The minimum wage has been set in recent years in isolation from the economic parameters enshrined in the Minimum Wage Act. In 2021, during the ongoing crisis, it is expected to exceed 53% of the average wage. This will break the 50% level set by the social consensus in previous years. This is an undesirable and dangerous situation for the economy. It is necessary to restore the predictability of the minimum wage in the years to come. And to ensure that it meets the requirement to balance social objectives with economic objectives.
The minimum wage is a very important “institution” in Poland. The principles for determining it are laid down in Article 65 of the Constitution. But the same article also states that ‘public authorities have policies aimed at full, productive employment’. Convention 131 of the International Labour Organisation of 1970 also recognises the dual importance of the minimum wage. At the same time, the minimum wage is intended to have a social and economic function. The Convention makes it clear that the level of the minimum wage should meet two conditions at the same time: take into account the needs of the worker and his family in relation to the overall level of wages in the country, the cost of living, social benefits and the standard of living of other social groups, and take into account the requirements of economic development, i.e. labour productivity, the level and rate of increase in national income, the pursuit of and maintenance of a high level of employment. Such a broad approach to the minimum wage includes two contradictory trends, one of which means reducing the setting of minimum wages too high and the other preventing wages from being too low.
In view of the above, we are very positive about the combination of the “labour” and “economy” departments in one resort following the recent reconstruction of the government. We hope that this will result in balanced decisions in the process of setting the minimum wage.
The crisis and the practice of recent years show that it is necessary to adapt the Law on the minimum wage and the practice of its application to balance social and economic objectives. That is why the social side in the RDS has submitted this topic to work under the new social pact. The Entrepreneurship Council calls for work to be done as soon as possible to ensure that the new arrangements apply as early as 2022.
The minimum wage rules must include a special clause allowing the minimum wage to be frozen or even revised in emergency situations (such as the economic crisis). As, for example, in the expenditure rule, for which there is an exit clause, which the government has applied precisely during the current crisis.
Minimum wage regulation must take into account adjustment mechanisms in situations where growth is expected to be adjusted, wage growth, as we have seen recently when we have seen a recession of around 2.8% instead of GDP growth of 3.7% in 2020 (preliminary GUS data of 29 January).
The minimum wage mechanism must have a clear target in relation to the average wage in the economy, i.e. 50% and mechanisms to achieve this objective, as well as mechanisms to counteract the ‘puncture’ of this target (this relationship will increase to more than 53% in 2021).
The mechanism for shaping the minimum wage must guarantee its predictability. The move away from a mechanism balancing social and economic objectives should only take place in emergency situations. That is why the legislature, in a law of the highest rank, namely the Constitution, has ordered the statutory regulation of the way in which the minimum wage is to be set so that it is not arbitrarily fixed.
The minimum wage should be depoliticised. The place where the minimum wage is set should be the Social Dialogue Council and the main decision-makers of workers and employers. The minimum wage should be determined on the basis of sound and deep economic analyses within the framework of statutory regulations.
The Entrepreneurship Council calls for institutional arrangements to guarantee a predictable and socially secure minimum wage, but also an economically secure minimum wage.
