Minimum wages - they are very minimal

The minimum wage in Montenegro since January of last year is 450 euros in net amount, and the total duties on it cost another 117 euros. About 50 employees receive the minimum wage, which is about 22 percent of the total number of workers.

Its amount is determined by the Labor Law and is not related to the amount of the average salary.

In the period from 2013 to 2019, the minimum wage was at the same amount of 193 euros. At the end of that period, it amounted to 40 percent of the then average salary of 480 euros.

It was only in May 2019 that the Government and employers agreed to increase the minimum wage to 222 euros after a six-year hiatus. As a concession to employers, the amount of contributions for health insurance was reduced by 2,3 percent of the gross salary.

After the change of government in Montenegro, the minimum wage was increased to a net amount of 1 euros by an amendment to the law from October 2021, 250, and from January 1, at the proposal of the then Government through the "Europe Now" tax reform program, it was set at 450 euros. Then the employers accepted this increase of 80 percent, because at the same time a non-taxable part of the salary up to 700 euros net was introduced and the health insurance contribution of 20,5 percent was abolished.

The average salary in Montenegro for April this year is 786 euros, so the minimum has a value of 57 percent of the average.

The lowest average net earnings in Montenegro, according to the data of the Monstat Administration of Statistics, in April were those employed in the almost defunct processing industry of 610 euros, followed by average earnings in trade of 646 euros and in the catering industry of 688 euros.

Employees who receive minimum wages from January have an additional advantage, because due to the amendment of the General Collective Agreement, all benefits they receive in addition to wages - for overtime work, work on holidays and others, must be additionally calculated on the minimum wage amount, which was not the case until then. Part of the employers used a legal loophole to include these benefits in the minimum wage calculation.

In the pre-election campaign, it is announced that the minimum wage will be 700 euros, but part of the public is skeptical about those promises.

Serbia: Basket much faster than salary

Extraordinary negotiations on increasing the minimum wage in Serbia at the end of May at the initiative of two representative unions were immediately terminated; the unions demand that the extraordinary increase of the "minimum" be valid from July 1, and the Government of Serbia, in agreement with the employers, wants a dialogue ahead of time, but for next year.

Until then, the minimum labor price established last August of about 40.000 dinars, i.e. 330 euros, would be in force, which inflation had already begun to take effect even before it came into effect on January 1, 2023.

President of the United Branch Trade Unions Nezavisnost and recently vice-president of the European Confederation of Trade Unions Čedanka Andrić He says for Danas that the UGS and the Federation of Independent Trade Unions of Serbia, as the initiators of the negotiations, agree that the conditions have been met for an extraordinary reconciliation of the "minimum" that is trotting with the so-called minimum consumer basket.

In February, according to the data of the Ministry of Trade, which determines the monthly list of needs, the minimum consumer basket cost 50.299 dinars (around 426 euros), a fifth more than the minimum, and now it has already fallen by a quarter of the minimum labor price.

According to the Labor Law, the Social and Economic Council is responsible for determining the "minimum" which, in negotiations with representatives of trade unions, employers and the Ministry of Labor, determines the amount for the following year no later than September 15 of the current year. If SES does not make a decision within 15 days from the start of negotiations, the Government of Serbia will decide on the minimum labor price within the next 15 days. The law also provides for extraordinary reconciliation, if the main parameters are disrupted, primarily inflation and living costs.

With the exception of last year when the SES decided by consensus, the amount of this salary has been announced by the Government for more than a decade, and even more often by the President of Serbia Alexander Vucic, which has absolutely no authority in this area, as Andrić emphasizes. The government is now saying that, allegedly, the projected inflation is already included in this year's "minimum", and that the requested 20 percent increase would encourage inflation and - unemployment!

Employers who pay wages higher than the minimum do not object to the new amount, especially before the untaxed part of the wages would rise, so they too could add a few more dinars to their employees.

This is the key to opposing the authorities - because the flow of money into the budget will be lower, and their obligations as employers will be higher. Namely, out of about 400.000 employees, which is every sixth of the total number, who have the lowest salary, a good part works in the public sector, which means that budget expenditures would be increased on that basis. The famous "aunties" in schools, for example, are on the "minimum" list.

You should know that the minimum wage can be paid by law for only six months, until the business is consolidated. But the state, as the largest employer, does not respect the law, so others are allowed to do the same.

By the way, the average salary for March in Serbia was 85.485 dinars, which is about 700 euros, and the median salary was 180 euros less (64.363 dinars), which means that more than half of the employees were in the poverty zone between the minimum and median salary.

However, comparative statistics show that the minimum wage in Serbia is not the lowest in the region, it is somewhere in the middle, but those 330 euros are relative, since the central bank "holds" the euro on the reins with its monetary policy, i.e. artificially inflates the value of the dinar. This causes disruptions in production costs, and allows the authorities to boast of a constant increase in wages, although real purchasing power is in constant decline.

One of the mantras that proves the success of the economic policy is the growth of wages, even the minimum wage, which is also shown by the figures. Thus, the minimum wage in the last year of the "previous government" in 2011 was in the range of 15.200 dinars to 17.920 dinars. At that time, the euro was worth between 100 and 105 dinars, and the consumer basket was around 300 euros. The same gap persists today, although the amounts are different.

A slight increase in the minimum was recorded in 2012, and then from 2013 to 2017, it was worth between 18.400, which was in June 2013, and 23.920 in August 2017. However, the euro also "varied", so in that period the minimum was somewhere between 180 and 210 euros.

The first significant growth expressed in euros was recorded in 2019, when the amount reached 28.575 dinars, but that year the dinar also "strengthened" against the euro.

In the next three years, the minimum amount expressed in dinars and euros will increase - but the consumer basket, both minimum and average, is always faster, and last year and this year, with double-digit inflation, the statistics of the government's explanations have also become meaningless. Moreover, the Minister of Commerce Tomislav Momirovic on Thursday he caused a round of laughter by declaring that prices had started to fall! Even though he himself knows that basic foodstuffs are 30 to 50 percent more expensive compared to the same period last year.

Two current pictures speak better than numbers - driving instructors in Niš went on strike on Thursday because their lessons cost only 380 dinars (3 euros and 20 cents), so they often do not earn even the "minimum". Employees of the Falk Ist garment factory in Knjaževac started their strike on Friday because, as they told their colleagues, Miljko Stojanović, they sew for Gucci, and they live on the minimum wage or a little more.

Croatia: In ten years, the minimum wage increased by 75 percent and amounts to 560 euros net

Seven hundred euros gross or 560 euros net is the minimum wage in Croatia and could be received by around 70 employees, according to the estimate of the Croatian Minister of Labour. In October last year, when the decision on the amount of the minimum wage was made, the minimum wage was half (50,3 percent) of the average gross salary, and by the third month of 2023, the value of the minimum wage would drop to 45 percent of the average. By the end of this year, it will probably drop to around 40 percent and so all over again.

The level of the minimum wage is determined by the Government once a year, with prior consultations with the social partners, which as a rule end up fighting each other, each for their own reasons. It is too much for companies, especially from labor-intensive activities, too little for trade unions. The fact is that the minimum wage is growing much faster than the average, for example in the year of Croatia's entry into the EU – 2013 – the minimum gross wage was 400 euros and since then it has increased by 75 percent. In that ten-year period, the average net salary nominally grew less - 52 percent. Realistically, however, when inflation is taken into account, in ten years the average salaries have increased by about 20 percent.

A stronger increase in income occurred in 2023, when from the end of last year to March of this year, the average net salary increased by about eight percent and for the month of March amounted to 1130 euros net (1556 gross). According to salaries from December 2022, at the end of last year, Croatia had 140.000 employees in legal entities (excluding trades and freelance professions) whose gross salaries were up to 700 euros. Already for January 2023, the incomes of employees from the first ten employees with the lowest incomes jumped to around 800 euros gross and remained there for the next three months for which there are publicly published data.

This is primarily the result of the increase in the minimum wage and an earlier legal intervention by the Croatian Government that the minimum wage includes only wages for regular work. Allowances for overtime work, weekend work, shift work and the like must be paid beyond the minimum. By the way, the structure of employees by salary level shows that ten percent of the lowest paid workers in the country currently earn around 630 euros net, the average or medial salary is 950 euros, and ten percent of the best paid Croats have a net salary of more than 1715 euros.

Minimum wages are most prevalent in the security industry, the textile and wood industry, certain parts of the metal industry, and trades and independent professions where lower wages are traditionally paid to avoid paying social contributions.

The Croatian government has announced that starting next year, it will additionally increase net incomes for low wages by exempting workers whose salaries range from 700 to 1300 euros gross from the obligation to pay part of their pension contributions. Technically, this will be done by exempting 700 euros from the gross salary of 300 euros from paying contributions for pension insurance for the state pension system (15 percent), and contributions will be calculated on the remaining 400 euros. This exemption will be regressively reduced to a gross of 1.300 euros, after which full contributions will be charged. Unions have criticized the proposal because they believe it harms the pension system and breaks the link between paid contributions and the amount of the pension. By the way, when they retire, all employees whose salaries during their working life were below 80 percent of the average salary in the country enter the category of the lowest state-guaranteed pension, which currently amounts to 11 euros per year of service.

BiH: Great expectations from the new Government

The record inflation faced by Bosnia and Herzegovina hit the citizens who receive the minimum wage the most.

In order to mitigate its consequences, the government in the past period sought to increase the minimum wage. Thus, on January 12 of this year, the Government of the FBiH passed a Decision establishing the lowest salary for the period from January 1 to December 31, 2023, in the net amount of 596 KM (298 euros), which represents an increase of 9,85 percent compared to the lowest salary established for 2022.

However, this is nowhere near enough to help citizens, especially if you consider that the galloping rise in prices has led to the consumer's basket amounting to close to 3000 KM (1.500 euros).

However, a glimmer of hope is provided by the newly appointed FBiH Government, whose priority is to increase the minimum wage to KM 1000, with the adoption of the Law on Minimum Wage. This was underlined once again for Oslobođenje Vojin Mijatović, Federal Minister of Development, Entrepreneurship and Crafts.

"It is the third part that is missing with the amendments to the Law on Contributions and the Law on Income Tax. When the necessary calculation is finished, it will very soon be up to the Government, and then also to the FBiH Parliament. This is our commitment and strategic commitment. With the agreement with the employers' association and the trade unions, we will go into that process by the end of the year. This must be resolved in order to stop the departure of the workforce from Bosnia and Herzegovina. There are a lot of priorities, and this is one of the priorities of this Government", emphasized Mijatović.

Mevludin Bektic, a member of the delegation of the Federation of Independent Trade Unions of Bosnia and Herzegovina in the Economic and Social Council, reminds Oslobođenje that the minimum wage is adjusted according to the Decree of the Federal Government.

"That is unacceptable when we know that we had inflation last year, but also this year. The concept of keeping the status quo and waiting another six months until the new minimum wage is adjusted is unacceptable. We have stated this on several occasions. The government in the old convocation ignored the social dialogue through the ESV and with its Decree made a decision on the method of harmonizing the minimum wage regardless of the opposition of the trade unions. The employers were met more than the unions, although the employers are not satisfied either. We are in a kind of government ghetto that has caused this situation and such permanently low incomes of workers regardless of the present inflation," Bektić points out.

Because of all the above, he tells us, five minimum wages are needed for a worker to be able to support his family, which causes indignation.

"There are great expectations from the new government. However, they are tying the Contributions Act and the Income Tax Act to the Minimum Wage Act, which is why I think we will be in a vicious circle again. I will remind you that these fiscal laws are not acceptable to the union because the government was looking for a neutral effect, and the collateral would be the workers, because the reduction in the budget would be settled from the workers' wages. Laws must be refined, then submitted to public debate and harmonized before the ECJ, and this will take time. The intention is to change these laws, but not to the detriment of the workers", says Bektić.

In January of this year, the Government of the RS passed the Decision on the lowest salary for 2023, which is 700 KM (350 euros). Before the adoption of that Decision, the minimum wage in the RS was 650 KM (325 euros).