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Gov't Proposes To Raise Minimum Wage By 7.6%, Public-Sector Wages By 4.1% Next Year
The government adopted macroeconomic assumptions for the 2025 budget, including preliminary proposals of minimum wage and public-sector wage increases. Ministers approved a 2025 headline inflation forecast of +4.1% Y/Y, while pencilling in a 7.6% minimum wage hike. At the same time, the government approved an increase in public-sector wages to the tune of 4.1%, i.e. equal to the rate of inflation.
- Money.pl circulated a piece noting that raising public-sector wages by 4.1% will cost the budget around PLN9bn as opposed to the PLN16-17bn price tag attached to the Family, Labour and Social Policy Ministry's proposal to implement a 7.8% increase. The article suggests that the Finance Ministry is not ruling out a larger increase, but any such decisions will be made during the upcoming negotiations with the Social Dialogue Council, which includes representatives of employers and trade unions.
- ING note that the minimum wage increase is larger than in the past two years (17.8% in 2023 and 20.5% in 2024) but slightly higher than previously (7.7% in 2021 and 7.5% in 2022). They expect wage pressures to remain significant in 2025, which could contribute to the persistence of core inflation.
- mBank expect that inflation will likely be a tad higher, which, from a fiscal perspective, gives the gov't a safety buffer. They note that the minimum wage hike is larger than indicated by the PM earlier, but is close to their projection. A smaller increase (relative to previous years) should help normalise overall wage growth.
- Pekao point to much smaller anticipated increases in minimum and public-sector wages than those implemented in 2024, which stems from a slower CPI inflation (a point of reference in the process of setting the minimum wage) and fiscal consolidation (smaller public-sector wage hikes). They believe that this supports the stabilisation of inflation at lower levels.
- PKO write that if the government's proposals are implemented, then wage growth should slow to less than +10% Y/Y at the beginning of next year, which alongside the expected increase in productivity should suppress ULC growth to around +3% Y/Y. In their view, this should help bring core inflation to the NBP's target, supporting calls for interest-rate cuts.
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Why MNI
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