Employers not backing govt proposal to subsidise minimum wage rise

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Ljubljana – The Employers’ Association is not supporting the Labour Ministry’s proposal to partly cover the minimum wage rise for employers for a limited period of time since it thinks such a measure would offset less than 40% of the increase in labour costs. The organisation urges a better solution.

The association said today in a press release that employers would still take the brunt of the rise as the proposal would not even offset 40% of the increase, an amount that was put forward by Labour Minister Janez Cigler Kralj yesterday when he announced the gross minimum wage for 2021 would be raised to EUR 1,024.

The minister presented what seems a compromise since the rise is the lowest possible under the 2018 changes to the minimum wage act.

To further appease employers, who had been warning about the ramifications of the rise for companies, he also unveiled a proposal to lower the lowest base for social contributions from 60% of the average pay to the sum corresponding to the minimum wage.

The state would pay some 40% of the rise, Cigler Kralj said. The measure would be effective through June with the option of a six-month extension.

Meanwhile, employers do not agree and do not plan to back the proposal, urging the government to come up with a solution that would be better at mitigating the impact of the rise as part of the next stimulus package.

Their association also reiterated that it was key to freeze the minimum wage rise at least for a year, noting that it had been calling for such a step since March 2020 in light of the severe economic fallout caused by Covid-19.

Instead of the rise, employees could receive crisis bonuses this year, covered entirely by the state, the association said. It warned it was impossible to predict when the situation would return to pre-Covid levels, adding that such a recovery would not happen this year for sure though.

Under such circumstances, the economy could not face the inevitable impact of the rise such as higher labour costs and reduced liquidity, the association believes, warning that the rise would also lead to lay-offs.

Meanwhile, some employers have welcomed the ministry’s proposal to subsidise the rise, including the OZS chamber of small business.