Czech minimum wage to grow by 9 per cent in 2019: Minister

Base rate previously jumped 11 per cent in January
||Last Updated: 11/19/2018
A boat passes under a bridge in central Prague, on Nov. 11. REUTERS/David W Cerny

PRAGUE (Reuters) — The Czech government plans to raise the minimum wage by nine per cent in January 2019, the seventh increase in as many years, as solid economic growth fuels demands for pay increases.

The monthly minimum wage should grow by 1,150 crowns to 13,350 crowns (C$769) next year, Labour and Social Affairs Minister Jana Malacova said after a meeting of coalition officials, employers and trade unions on Thursday.

The centre-left government is expected to approve the rise next week, she said.

"(The minimum wage) is below the poverty level now, which the honestly working people don't deserve. I am glad that we have reached an agreement," Malacova said on Twitter.

The minimum wage was raised by 11 per cent in January 2018. The rises boost state revenues due to higher tax and social insurance payments by workers.

The central bank has incorporated the next wage rise into its inflation outlook. It expects annual inflation of 2.2 per cent in the fourth quarter of 2019.

Approving the rise might prove difficult next week as the government of Prime Minister Andrej Babis is facing a no-confidence vote after a news report suggesting that the prime minister's son had been sent abroad to hinder a fraud investigation.

Malacova represents the junior coalition party, the Social Democrats, in the government.

The central bank and the Finance Ministry expect economic growth of three per cent this year, although it cooled in the third quarter.

Gross domestic product (GDP) grew by 2.3 per cent year-on-year in the July-September period, hurt by capacity shortages and weaker foreign demand.

Czech wage growth kept strong momentum in the second quarter, beating expectations. Average monthly nominal gross wage was 31,851 crowns ($1,834) and the median 27,236 ($1,568) crowns. 

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