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Minimum Wage Increase: A Cascading Effect on the Labor Market

CAREERSMinimum Wage Increase: A Cascading Effect on the Labor Market

The Polish gross minimum wage will increase to 4242 PLN from January 2024, and will be leveled up to 4300 PLN in July. While this news is welcomed by some workers, it poses a massive problem for the job market. Labor market experts refer to the minimum wage increase as a cascading increase, which may cause a rise in the prices of products and services across various economic sectors.

“Salaries should be increasing. We should work towards natural growth. Currently, we are dealing with a minimum wage on steroids that grows absolutely disproportionately to the abilities of many entrepreneurs. The result is a drastic leveling of wages in the budgetary sector as well as many companies having to contemplate raising prices or even layoffs,” says Hanna Mojsiuk, the President of the Northern Economic Chamber in Szczecin.

The time of stagnation or recession is not the time for a minimum wage increase

Entrepreneurs associated with the Northern Economic Chamber advocate for consistent, gradual wage increases for workers. Although it is natural for wages to rise over time, issues arise when this growth is artificially stimulated and is disproportionate to the entrepreneur’s capabilities. For many companies, 2023 was a time of crisis. Increasing the minimum wage at this time poses a real threat of inflation growth and layoffs.

“2023 was a time of stagnation or recession for many companies. It is not the time for a strong minimum wage increase. This is particularly felt in industrial, trade, and SME sectors. It is true that many people are sought after in the labor market. However, we have to ensure that by regulating wage levels, we don’t end up in situations where labor costs for companies exceed potential profits. Subsequently, many companies could face bankruptcy. We are concerned about trade, services, gastronomy, or industries relying on physical workers,” says Hanna Mojsiuk.

“Moreover, we cannot overlook the issue of salary leveling. This is most visible in the public sector where everyone will soon earn the minimum wage or slightly more. This could lead to a situation where there’s no one to work in offices, schools, or administrative units due to uniform low wages,” adds Mojsiuk.

The minimum wage increase impacts us all, and we will all feel it in our wallets, say when we visit a restaurant

Do entrepreneurs feel the increase in the minimum wage? For the labor market, the January jump from 3600 PLN gross to 4242 PLN is cascading.

“This is not a change that only affects those who earn the least. Our experiences show that those who were earning what will now be the minimum wage will also ask for raises. Employers can expect a “pilgrimage” of workers in January who want to earn more. If the employer disagrees, they may face employee departures, which is a serious problem in sectors like construction, transport, and services. The minimum wage increase is something all of us will feel in our wallets, for example, when we go to a restaurant,” says Katarzyna Opiekulska, Managing Director of LSJ HR Group.

“Company owners know that retaining an employee requires an attractive offer. We can see that many sectors, such as logistics, warehousing, or industry, are regularly increasing wages due to staffing situations and market conditions. A sharp increase in the minimum wage is not only unnatural in the current economic situation but also forces many companies to accelerate their automation and robotization processes. We can see this in trade and warehousing,” says Dorota Siedziniewska-Brzeźniak, a labor market expert at IDEA HR Group.

In terms of the minimum wage, the Northern Economic Chamber supports the position of the SME Spokesperson.

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