STA, 4 July 2019 - The Ministry of Labour has come up with a calculation of the effect of the planned rise in the minimum wage in 2020 on the entire economy, establishing that, coupled with the elimination of bonuses from the minimum wage, it would cost the private sector EUR 197.1 million or 1.77% of the wage bill.
The calculation comes as a response from the government to the criticism from employer representatives about it having failed to make proper projections before adopting legislative changes raising the minimum wage.
In a recently published document, the ministry says that the effect of the raise of the gross minimum wage could be estimated relatively precisely based on data from previous years, while it is much harder to estimate the effect of the elimination of bonuses, as there are no relevant databases.
The ministry has established that the financial effect of the expected raise of the minimum wage in 2020 would be EUR 63.6 million or 0.57% of the wage bill, and the elimination of bonuses an additional EUR 133.5 million or 1.2% of the wage bill.
In commerce, where the number of employees on minimum wage is the highest, the added cost is expected to be EUR 37.3 million or 1.81% of the wage bill.
The ministry has assessed that the cumulative financial effects at the level of the entire economy will not be significant, while it is aware that they could be higher in industries with lower wages and a higher number of permanent bonuses.
It does not expect that a large number of companies will get into trouble considering that the total net profit posted by Slovenian companies last year increased by 16% and that the economic situation and the situation on the labour market are favourable.
Employer representatives are disappointed with the calculation, with Jože Smole, the secretary general of the Employers' Association, telling the STA that the analysis was very modest, featuring only three pages of text.
Smole is convinced that it does not take into account the complexity of the matter and is critical of the ministry for relying too much on the general data about profit and disregarding the possibility that companies which do not make profit would get into further trouble.
The Chamber of Commerce and Industry (GZS) reiterated in its response that it was against the changes to the minimum wage act, which it believes will hurt vulnerable individuals and companies the most.
The changes, which were passed last year without the approval of all social partners, raised the minimum wage this year from EUR 638 net to EUR 667 net, and next year it is expected to increase to EUR 700 net.
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