Minimum wage in 2024

Work is currently underway to determine the new minimum wage rate for 2024. The government aims to introduce changes and increase the current wage amount by means of a regulation of the Council of Ministers, authored by the Ministry of Family and Social Policy. The draft regulation has now been submitted for public consultation and interdepartmental arrangements. The Council of Ministers wants the minimum monthly and hourly wage rates to be increased twice in the coming year. The first increase is planned from 1 January 2024, and the second six months later, i.e. from 1 July. As a result, employers must prepare for two wage increases in the coming year for employees earning the statutory minimum wage. All ministries now have 7 days from receipt of the draft to submit their comments and amendments. In addition, the draft will be subject to public consultation. It will be reviewed by the Social Dialogue Council, employer organisations, trade unions, and the Joint Commission of Government and Local Government, all of which will have 21 days from receipt to provide their opinions.

How much will the minimum wage be from 2024?

The government plans that from 1 January 2024, the minimum wage will be PLN 4,242, and the minimum hourly rate PLN 27.70. From 1 July, another increase is planned, after which the minimum monthly wage will rise to PLN 4,300 and the hourly rate to PLN 28.10. It is worth recalling that the current statutory minimum wage stands at PLN 3,600 and the hourly rate at PLN 23.50. Within the statutory timeframe, the Social Dialogue Council did not reach an agreement on the amount of the minimum wage and hourly rate for certain civil law contracts in 2024. As a result, pursuant to Article 2(5) of the Act, the Council of Ministers is obliged to determine the above-mentioned rates by way of regulation. The proposals presented by the government cannot be lower than those proposed by the Social Dialogue Council. The Council of Ministers must determine the final amounts by 15 September of the current year.

Wage indexation – what are the consequences?

At a meeting of the Social Dialogue Council, Minister Marlena Maląg indicated that the proposed changes will benefit more than 3.6 million people. However, it is anticipated that employers will bear total costs of around PLN 35 billion. For employees earning the lowest wages, the proposed rates may appear very attractive. Yet already, considering the wage levels in 2023, it can be stated that the planned increases will pose a considerable burden for employers, especially smaller entities. The project’s impact assessment found that increasing the minimum wage will help maintain the purchasing power of the incomes of workers who earn the lowest wages. The Ministry of Family and Social Policy anticipates that the proposed changes will lead to an increase in state budget expenditure in 2024. It is estimated that the costs due to the wage increases will rise by approximately PLN 2,025.0 million per year. The state will finance certain wages, contributions, and benefits from the budget, where their amounts are linked to the minimum wage. These subsidies will be the main reason for the increase in expenditure.

Summary

To summarise, such a significant increase in the minimum wage and hourly rate may at first glance appear highly beneficial, particularly from the perspective of employees. However, the changes could prove to be an excessive burden for employers. To manage costs, they may be forced to reduce staffing levels or limit wage increases for other employees. The proposed changes may also be disadvantageous for employees with higher qualifications who earn more than the minimum wage.