The Polish government will raise the national minimum wage by 15% in 2020 and again in 2021, followed by a 10% increase for each of the following years until 2024.
Background
According to the Central Statistical Office of Poland, over 1.4 million people in Poland earn the minimum wage. For the past few years, the Polish government has steadily increased the minimum wage to a percentage higher than inflation. This strategy has led to overall wage growth, with a Gross Domestic Product (GDP) increase of about 5% since 2017.
Key details
The minimum wage in 2019 is PLN 2,250 per month and will increase to PLN 2,600 per month as of 1 January 2020, an increase of about 15%. It is expected to rise by about 15% in 2021 and 10% in each of the following years until 2024, aiming for the government-targeted minimum wage of PLN 4,000 per month.
From a macroeconomic prospective, raising the minimum wage is expected to lead to an overall wage growth and to an increase in purchasing power.
However, from an employer perspective, this change will increase companies’ labor costs and potentially lead to a loss in profitability or dismissals for economic reasons. Employers will be obligated to increase all their employees’ salaries to match the national minimum wage threshold and to maintain differentials between pay grades within the company.
Next steps
The minimum wage increase is concurrent with the new mandatory employer contribution to the employees’ capital pension scheme of 1.5% of the employee’s remuneration. Employers should budget for the overall increase of labor costs, review their current pay arrangements, and apply the wage increase to employees’ salaries from the first full pay period starting on or after 1 January 2020.