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Minimum wage increases in Poland put upward pressure on salaries, but companies may offset costs by raising prices

BUSINESSMinimum wage increases in Poland put upward pressure on salaries, but companies may offset costs by raising prices

Since 2015, the minimum wage has more than doubled. This year, two more increases will take place, totalling nearly 20%. The first increase already took effect on January 1, and the second is set for July. While only about 10% of workers receive the national minimum wage, the increase translates to wage pressure on other positions and inflation due to increased costs in companies. For individuals in higher positions who earn more, comfort at work matters more than raises, but their salaries will also go up by 7–10% over the next year. Industries most affected by wage increases are those facing a shortage of staff, such as industry, construction, transportation and trade.

In 2024, the minimum wage will increase in two stages. As of January 1, the lowest salary is 4,242 PLN, and from July 1, it will increase to 4,300 PLN. Increases also pertain to the minimum hourly rate for certain civil contracts: from January 1, it is 27.70 PLN, and from July 1, it will rise to 28.10 PLN. This two-tier mechanism was already used in 2023 due to over 5% inflation. In 2015, when Law and Justice party came to power, the national minimum was 1,750 PLN gross, while the minimal hourly rate, which has been in force since 2017, was then 13 PLN gross.

Inflation in Poland had been rapidly increasing until February 2023, when it reached 18.5%, a rate unseen for over a quarter-century. Later however, it fell sharply to 6.6% in October. November saw no changes. Economists from PKO Bank Polski expect that in 2024 inflation will average 4%. Meanwhile, economists from ING Bank Śląski believe this level will be possible in the first half of the year, and the average for the year will be around 5.5%.

In consideration of the projected inflation rate, most companies are anticipating this in their 2024 budgets and are considering overall salary increases of 7–8%, and even up to 10% for employees earning above the minimum wage, in order to compensate for inflation. The higher the position and the higher the salary, the more important are aspects such as workplace culture, and company’s employer branding, especially for younger employees who choose companies where they simply enjoy working.

A study by staffing agency Randstad found that 60% of companies plan to raise wages in the coming six months. In most cases, the decision to raise wages is influenced by the statutory increase in the minimum wage. More than half of the firms surveyed plan to offset the rise in the minimum wage by increasing the prices of their products and services. Other cost-saving strategies include cancelling new recruitments, halting investments, or suspending raises for higher earners.

Sectors such as industry, manufacturing, trade, construction, and transport, which are currently experiencing severe staff shortages, are going to face the most wage pressure. According to a report by ManpowerGroup, a third of employers in Poland aim to increase employment in the first quarter. Nearly half do not plan any personnel changes, and 16% are considering layoffs.

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