Business groups express concern at Polish government’s minimum wage hike

Business groups have expressed concern at the Polish government’s plans to raise the minimum wage next year by more than previously announced, which they say could put many small businesses at risk. The decision was, however, welcomed by trade unions.

On Thursday, the government published a draft regulation showing that the minimum wage will increase to 4,666 zloty (€1,089) gross a month from 1 January 2025, up 8.5% on its current level. That figure was 40 zloty (€9.34) higher than what the government originally proposed in June.

The hourly minimum wage will increase to 30.5 zloty, also up 8.5% from now. That is 0.3 zloty more than had been outlined in June.

In a letter to Prime Minister Donald Tusk after the new planned minimum wage levels were announced, the president of the Polish Chamber of Trade, Maciej Ptaszyński, said that his organisation was “firmly opposed” to the change.

He warned that the increased labour costs would be “to the detriment of small and medium-sized businesses and, consequently, to the detriment of the Polish economy”.

The changes would be “devastating for thousands of retail outlets that are already operating at break-even only”, would “make the Polish economy unattractive to investors”, and could further stoke inflation, which has already accelerated in recent months, wrote Ptaszyński.

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According to the government’s own estimates, the planned increase of the minimum wage – which will benefit over 3 million workers – will entail additional costs to small and medium-sized companies of 11.8 billion zloty (€2.75 billion) and 3.15 billion zloty (€740 million) for large companies.

In its impact assessment, the government acknowledges that raising the minimum wage may increase labour costs to such an extent that some employers may decide to reduce their workforce, which would affect low-skilled workers in particular.

The Lewiatan Confederation, an employers‘ organisation, estimates that yesterday’s decision to increase the minimum wage by more than previously announced will in itself “cost businesses, mainly micro ones, 2 billion zloty next year”.

Lewiatan also accused the government of “violating the principles of social dialogue” by making a unilateral decision to raise the minimum wage by more than previously announced.

Local authorities have also expressed concern over the minimum wage increases, which they say will result in a flattening of salaries that can be demotivating for officials with more seniority.

“This creates turmoil for us in the funding of our employees in [places] where there is a significant percentage employed on the minimum wage,” said Grzegorz Cichy, mayor of Proszowice and chairman of the Union of Small Polish Towns, quoted by the Polish Press Agency (PAP).

“It causes wages to flatten out,” he added. “People who work as administrative assistants, or even cleaners, start to have similar salaries to long-serving employees responsible for tax decisions or investments, for example…This has a demotivating effect on employees.”

The government’s decision, however, was welcomed by trade unions.

“Although the employers‘ organisations expressed their opposition to the increase demanded by the All-Poland Alliance of Trade Unions (OPZZ), the government finally conceded to us, fulfilling not only its statutory obligation but also the expectations of the employees,” wrote the OPZZ in a statement.

Analysts from the bank PKO BP reported that the minimum wage increase will provide the state with an additional net revenue of 4.5 billion zloty.

Wages in Poland grew at the fastest pace in at least two decades in the second quarter, partially due a record minimum wage hike. At the same time, unemployment in Poland fell this summer to its lowest level since 1990.

Main image credit: sol / Unsplash

Alicja Ptak

Alicja Ptak is senior editor at Notes from Poland and a multimedia journalist. She previously worked for Reuters.