Although there is still a year left to the parliamentary elections, the government has already prepared a gift for around 3 million voters. He showed he had a gesture and announced an increase in the minimum wage greater than previously assumed. From January 1, 2023, the lowest earners can count on increasing the minimum wage under the employment contract from PLN 3,010 gross to PLN 3,490 gross. After six months, there will be a second increase by law – to PLN 3,600 gross.
Economists note that next year’s minimum wage will be around half of the average wage. It will increase by almost 20%, while the forecasts for the national average assume rather low double-digit dynamics. Though it shouldn’t be a big shock to the economymany employers will have a hard time to crack.
After the tax increase under the Polish Agreement, the government adds further costs to companies (related to employment), and these are already struggling with, inter alia, with rapidly growing bills for electricity, gas, fuel, etc. In addition, there are very high costs of servicing loans and financial obligations, which are the result of increases in NBP interest rates.
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How much will employers pay?
Currently, the cost of the employer employing the minimum wage (PLN 3010 gross) is over PLN 3500. Out of this, the employee only gets net PLN 2,181 net. In a year, his payment will be higher by PLN 404 net, but the employer will be charged with an additional PLN 810. Its cost will increase to PLN 4,337.
Considering that in the first half of next year, the gross rate will be PLN 3,490, and PLN 3,600 gross in the second half of next year, the average monthly increase in the employer’s costs will amount to PLN 744.57. Throughout the year, it will be an additional nearly 9 thousand. zloty.
With the 3 million employees that the government believes will be covered by the raise, this is a total the amount of PLN 27 billion. The total costs of employers in connection with the increase in the minimum wage will increase to the maximum.
– The government’s decision does not take into account the situation of enterprises whose activities are increasingly loss-making. Entrepreneurs struggle with the increase in fuel prices not by 30%, like households, but by 300 or 800%. – points out Kamil Sobolewski, chief economist of Employers of the Republic of Poland.
In an interview with Business Insider, he admits that the government’s decision to raise such a large minimum wage is a shock and it will have far-reaching consequences for all citizens too late.
Without investment, there will be no more goods
We are talking about limiting investments, which will affect production, which will not keep up with the growing consumption, driven by, among others, rising wages.
The economist of Employers of the Republic of Poland emphasizes that you can’t consume more than the companies can produce. He suggests that next year, if nothing changes, we may see even more empty shelves in shops and the available goods and services will be very expensive.
– The ongoing crisis is a crisis of scarcity. The recipe for overcoming the crisis must not be giving people money, but fighting the scarcity. Investments are the way to do this. It is difficult to imagine that such government decisions and uncertainties in the economy will encourage entrepreneurs to continue investing their funds – comments Sobolewski.
He reminds that a few years ago the PiS government established the Strategy for Responsible Development, known as the Morawiecki Plan. There were noisy announcements regarding investments, which were to increase from 20 percent. GDP (in the last year of the PO / PSL government) to 22-25 percent. in 2020 and be maintained at around 25%. by 2030
The plan didn’t work out because in 2021, the investment rate in Poland was only 16.6 percent. GDP, which was the lowest value since 2005 and the second lowest result in the EU.
The government is counting on additional revenues
Cezary Kaźmierczak, the president of the Union of Entrepreneurs and Employers (ZPP), reacts with more calm to the announced increase in the minimum wage, admitting that it is very difficult to talk to the government about this in the face of low unemployment. Nor is it surprising that the government is so carelessly giving away money that is not its own.
– The government loves to mess with the minimum wage. For each additional PLN 100 of the increase, approximately PLN 50 will go to the budget. This is due to taxes paid by employers and employees – the president of ZPP points out in an interview with Business Insider.
He does not expect that a large proportion of companies will be forced to lay off workers or face other financial problems. It notes that the labor market has not suffered significantly from the pandemic and the war. Therefore, entrepreneurs will also shoulder a large increase in the minimum wage.
However, he warns against even greater wage pressure from workers earning above the minimum wage.
– In autumn, entrepreneurs will succumb to enormous wage pressure. Employers are losing – thinks Kaźmierczak.
Entrepreneurs’ mood is getting worse
The announcements of a minimum wage increase do not improve the mood, especially in small and medium-sized enterprises. And these were very bad in the first half of the year. The business sentiment index “Busometr ZPP” was in the last reading at the lowest level in the whole history of the survey lasting a decade.
Over 500 representatives of the SME sector (micro, small and medium-sized enterprises) indicate an exceptionally low index of the “economic situation” and “investments” components. In the latter case, there have never been so many complaints.
Entrepreneurs asked about the “economic situation” in as many as 71 percent. indicated that it would deteriorate. When asked about investments, as much as 75 percent. declared that they did not plan any or that they intended to resign from those previously assumed.
Author: Damian Słomski, journalist at Business Insider Polska