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Attitude of the Employment Institute to the passed Minimum wage law

Yesterday, the Slovak Government negotiated and passed the proposal of Minimum wage law. Updated Minimum wage law seems not to be fully clear in all items.

According to Employment Institute in § 2, section 2 of the passed Minimum wage law, it is not fully clear how the worker e.g. working part time would be remunerated or whether his remuneration would be based on actual work contract formulation and not on the basis of individual worker's understanding. The full time work, in section 4, is explained by the simple hourly rate increase if the worker is working less than 40 hours / week. It would be appropriate this § 2 break down into two separate paragraphs so that they could properly cover the mentioned problematics of the work contract.

In § 6 of Minimum wage law is not fully clear what is the connection among individual items based on which the amount of minimum wage is stipulated. Mainly, as for the connection of the minimum wage amount adjustment with the employment and the living wages development. According to Employment Institute, the minimum wage increase has an impact on employment. The minimum wage inproperly high does not have to have the positive impact on employment because not only wages' costs would increase but the social insurance costs would increase as well. This situation would be influenced by updated Law Nr 5 – On employment services. As regards the increased difference between minimum wage and living wages, this could be a positive motivation for low qualified workers to be employed. Economically, we cannot consider to unduly bind legislatively both these items.

Joyful, not only for the Employment Institute but probably for employers as well is the law clause that minimum wage amounts, according to § 2 section 1, are always stipulated for the period from 1 January till 31 December.

Finally, we would like to stress that for stipulating the amount of minimum wage would be better to introduce the system of regional differentiation proposed by the Employment Institute. This system of regional differentiation could incorporate these differences for the favour of employees, unemployed and employers.