Another wave of increase in the minimum wages in the Czech Republic for all categories will influence not only 150 000 employees, but also, for instance, recipients of the tax discounts or private entrepreneurs who make minimum mortgage payments for health insurance.
The minimum wage at the beginning of 2019 will increase for the fifth time in a row. The government agreed to raise the minimum wage by 1150 CZK to 13 350 CZR for the lowest category of employees’ salaries. The basic hourly rate will increase from 73,20 to 79,80 korunas. It will be prohibited to pay employees below this rate since the new year.
The Minister of labor and social affairs, Jana Malakova, commented in this matter: “The work should be paid for. It is impossible for working people to face problems of survival and to receive social benefits. The economy is in a very good shape. The productivity of the Czech economy reaches 70% in relation to the German one, at the same time, our staff earns only 30% of German salaries. This is why I suggested an even faster increase in the minimum wage…”
We have already mentioned that the minimum salary in the Czech Republic varies depending on a profession. More information can be found here.
Accordingly, the increase in the minimum salary also influences different categories of occupations in a different measure:
The 1st category: 13 350 CZK instead of 12 200 CZK, if paid hourly: 79,80 korunas/hour;
The 2nd category: 14 740 CZK instead of 13 500, if paid hourly:
The 3rd category: 16 280 CZK instead of 14 900 CZK, if paid hourly: 97,30 korunas/hour;
The 4th category: 17 970 CZK instead of 16 400 CZK, if paid hourly: 107,40 korunas/hour;
The 5th category: 19 850 CZK instead of 18 100 CZK, if paid hourly: 118,60 korunas/hour;
The 6th category: 21 900 CZK instead of 20 000 CZK, if paid hourly: 130,90 korunas/hour;
The 7th category: 24 180 CZK instead of 22 100 CZK, if paid hourly: 144,50 korunas/hour;
The 8th category: 26 700 CZK instead of 24 400 CZK, if paid hourly: 159,60 korunas/hour.
Who will be influenced?
Of course, all the employed workers, i.e. employees, but this is not the whole list.
The sum of the minimum wage influences, for example, the number of certain tax benefits or is crucial for the taxation of pensions:
1. The maximum sum of the tax discount on placing children in a preschool institution will increase to the sum of the new minimum salary: up to 13 350 korunas;
2. Raising the annual income threshold gives the possibility to receive a tax bonus of 80 100 CZK (those who would like to receive the bonus must earn at least 6 minimum salaries).
3. Minimum deposit for health insurance will be increased to 1803 CZK (13,5% of the minimum wage) – for those who earn a minimum wage or private entrepreneurs.
4. The sum for registration at the labor exchange will now be 6675 korunas (half of the minimum wage).
5. The annual threshold for pension release from the income tax will be increased to 480 600 korunas (36 minimum wages).
Based on the estimates of analytics, the assumption of an increase in nominal wages means that the minimum wage will reach 39.3% of the average wage in 2019 in the Republic. This year the average wage should be 38.2%.
If you have any further questions, do not hesitate to contact us for advice. We have provided an accounting service for 12 years.