Methodology for Evaluating the Adequacy of Minimum Wage in the Czech Republic
The project, arising from the research needs of the Ministry of Labour and Social Affairs of the Czech Republic, is being developed in response to the adoption of the Directive of the European Parliament and Council on adequate minimum wages in the European Union. The EU Council adopted the directive on October 4th, 2022. According to the directive, the minimum wage in the Czech Republic needs to be established in a balanced manner that takes into account a number of factors, such as workers’ and their families’ needs, wage level in the country, living costs, taxes, social security benefits, and the relative living standards of different social groups. Additionally, it is necessary to consider economic factors such as the level and development of labor productivity. The Czech Republic does not have an automatic indexation mechanism, so it must update the minimum wage at least once every two years based on the mandatory criteria.
EU Member States must take into account at least the following four criteria in order to establish the minimum wage (or to establish and update the mechanism):
• the purchasing power of the minimum wage in relation to living costs
• the general level and distribution of wages
• the rate of wage growth
• the national long-term rate of productivity and its development
The project has three goals:
1) To develop a Methodology that would serve the Ministry of Labour and Social Affairs in evaluating the adequacy of the minimum wage with regard to various factors according to the Directive of the European Parliament and Council on adequate minimum wages in the European Union;
2) To conduct an analysis of the adequacy of the minimum wage based on the newly created and described methodology. The analysis will be compiled based on the created methodology;
3) to write an academic paper with the intention of publishing it in a foreign academic journal.