The statutory minimum wage in Slovenia this year has been set at €878 net a month, €100 more than the year before in the most substantial rise in a decade. There are concerns the hike will increase pressure for other wages to be raised as well and thus fuel inflation further.

The new minimum wage was announced by Labour Minister Luka Mesec on 12 January. The gross minimum wage will rise by 12% to €1,203.36 after it increased by 4.9% last year. The cost for employers will increase by 8.46%.

The rise will also lead to an adjustment of the minimum hourly rate for temporary and casual work by students and pensioners. According to the Labour Ministry, the rate is expected to increase from €6.17 to €6.92 an hour.

The minimum wage is set on the basis of inflation, pay trends, GDP and the minimum cost of living while taking into account income tax legislation. In October 2022, the minimum cost of living was calculated for the first time in five years, at €670, while annual inflation hit 10.3% in December.

With the rise, the government wants to help those who have been the most severely hit by inflation and spend most of their income on current costs, said Mesec. The higher minimum wage also brings up the question of other wages, he added.

"The government has already provided part of the answer," he said in reference to the tax reform that kicked in on 1 January raising the general personal income tax relief from €3,500 to €5,000. "This means that the lowest pay will rise by around €40 a month and the average pay by €11."

The government has also promised to reform the public sector pay system and is working on a new pay model and new collective bargaining agreements in the private and public sectors, which Mesec said would lead to higher wages as well.

The ministry would like to bring the lowest wage brackets up to the minimum wage. Mesec noted that 24 pay brackets in the public sector are below the minimum wage, which means the lowest earners need to get an extra on top of their pay to earn the minimum wage.

Trade unions estimate there are between 40,000 and 50,000 people on the minimum wage in the country.

Mesec first announced the €100 rise in the minimum wage in December, when employers warned the rise was excessive given the energy crisis.

There are concerns that the higher minimum will further increase pay disparities as ever more employees fall into the minimum wage bracket. The rise is driving up demands for other wages to increase as well, also because the government has promised rises to some groups in the public sector.

"Each wage rise disrupts pay ratios in the country, rewarding those who are best paid. These are some of the most populist daily moves they are making instead of saying they will draw up a new wage system over the next six months," Joc Pečečnik, the head of the Slovenian Business Club, told Radio Slovenija in criticism of the government's wage policy.