As of January 2025 the minimum wage in Poland will be raised to PLN 4666 gross, which means an increase of about 19% compared to 2024. In turn the hourly rate will scope the value PLN 30.50 gross, which changes the image of the labour marketplace in Poland. The decision of the Council of Ministers will benefit about 3 million workersand for many of them it will be a crucial improvement in income. How this increase will affect the economy, especially in the context of inflation? What will be the impact on entrepreneurs? Let us look at this change in detail.
History of minimum wage growth in Poland
It is worth noting that the minimum wage in Poland has undergone tremendous evolution since 2016, erstwhile it only amounted to PLN 1850 gross. This means an increase in over 150% until 2025, erstwhile the amount will be PLN 4666 gross. The dynamics of wage growth in fresh years has varied. In 2023 there was the biggest increase – by 19.6%, which was a consequence to expanding inflation and the request to adapt the minimum wage to economical realities.
By comparison, in earlier years increases were lower, for example in 2017 they amounted to 8.11%, in 2018 – 5%and in 2019 – 7.14%. However, in 2020, in the face of the pandemic and its economical impact, wages increased by 15.56%Which was a reaction to the crisis. Subsequent years, despite economical difficulties, have besides raised: 7.69% in 2021, and 7.5% in 2022.
What does a rise for employees mean?
For persons employed employment contracts change of remuneration to PLN 4666 gross means improving the standard of living. In turn, staff employed for contract orders with 168 working hours per month may number on a net rate of approximately PLN 22.03 per hour. This is simply a crucial change that increases the income of the least paid workers.
However, it must not be forgotten that rising minimum wage may entail higher costs for employers, which may affect their business decisions. Employers they will gotta face up to fresh costs that they may incur PLN 5621.59 gross per person. This can be peculiarly severe for tiny and medium-sized companies.
Minimum wage increases and inflation – what happens?
Many economists point to two main scenarios on the impact of minimum wage increases on inflation. On the 1 hand, higher salaries can stimulate consumer request as workers will have more income, which could lead to Price increases. expanding the purchasing power of citizens can increase request for products and services, which can theoretically lead to higher prices and, consequently, higher inflation.
On the another hand, wage increases may besides affect reduction in the profitability of companies, especially in tiny and medium-sized enterprises. Companies that will not be able to compensate for higher wages by expanding the prices of their products can reduce their investment capacity. This in turn can reduce further increases in wages and even lead to job cuts In companies that will gotta look for savings.
Will higher salaries translate into reduced unemployment?
Accelerating the increase in minimum wage can besides bring side effect in the form Employment growth in any sectors, especially those that employment a large number of workers in the lowest positions. Higher wages can make work more attractive to those who have previously remained outside the labour market. This in turn can improve the situation on the labour market, but only if companies are able to adjust their costs to higher wages.
Minimum wage increase in the context of tiny companies
Small and medium-sized enterprises, in peculiar those active in sectors with a advanced share of workers in the lowest positions, may face challenge adaptation of their business models. These companies may choose to automation production processes to reduce labour costs and to reduction of employment. In utmost cases, if they cannot cope with rising costs, they may be forced to operating restrictions.
The minimum wage increase, although favourable for workers, brings both benefitsand Hazards. On the 1 hand, it helps to improve the material situation of many people, on the another hand, it can be a challenge for entrepreneurs, especially those moving tiny businesses. The request to adapt to higher labour costs may lead to price increases and a simplification in the number of jobs in certain industries. For this reason, the decision to rise the minimum wage is simply a complex issue which we will be observing in the coming years.
Read more:
Historical minimum wage increase in Poland – what does it mean for the economy?
