Labour Code Changes Approved, New Mechanism for Minimum Wage Introduced

The Council of Ministers today, September 9, approved amendments to the Labour Code introducing a new mechanism for setting the minimum wage, Social Affairs Minister Natalia Efremova said. She added that the mechanism had been developed in August jointly with the social partners.

“The amendments set out the criteria and specific measures for those criteria when determining the minimum wage. Every year, the government will be required to propose the relevant amount by 15 August, following consultations and genuine negotiations with the social partners, so that a new minimum wage can be proposed. Every three years, an assessment of its adequacy will be carried out.”

The Minister of Social Policy stressed that the aim was for the minimum wage to reach both 60% of the median wage and the level of the cost of living.

She stressed that the social partners would play a substantive role in determining the actual wage through negotiations.

“To date, national legislation has used a single criterion, which does not take into account the overall socio-economic conditions that would provide a fairer and more predictable minimum wage, both for businesses and, ultimately, for the state when preparing the state budget. I can give you the specific details of the four criteria which, taken together, form a composite indicator that sets the upper limit for negotiations between the social partners.

“Purchasing power is the first criterion. It will be calculated based on the average annual change in the consumer price index for the small consumer basket. The overall level of wages reached will be calculated using national data on the annual change in the gross median wage. The rate of growth in minimum wages will be calculated using national data on the annual change in the average gross wage. Labour productivity – the only economic criterion in practice – will be calculated using the indicator for the annual change in gross value added per employed person over a 10-year period.

“In this way, we believe that national legislation will fully meet European requirements once the new mechanism for setting the minimum wage is adopted.”