Minimum wage rises will differ in Eastern Europe's V4

Significance

The new EU directive requires those member states that have a statutory minimum wage to set it in relation to indicative reference values, such as a basket of goods and services at constant prices, or gross median or gross average wages, and to increase collective bargaining levels where such agreements cover fewer than 80% of workers.

Impacts

• Upcoming parliamentary elections in Central Europe are likely to influence announcements of increases in the minimum wage.
• Poland and Hungary especially are likely to frame increases in the minimum wage without explicit reference to EU legislation.
• Any further rises in minimum wages are likely to frustrate attempts to reduce inflation through tight monetary policy.
• Promoting collective bargaining will be a function of how close Central European governments are to the trade unions.