Record increase in minimum wage will lead to wage compression

One of the last decisions of the outgoing government will have a significant impact on the economy in the coming year: the increase in the minimum wage. From January 2024, it will increase by as much as 17.8 percent. This is the second-largest increase – the last such jump was recorded in 2008 when the benefit was legally increased by over 20 percent.

“From the employee's point of view, this is a big plus, but from the employer's point of view, it is a big minus. The increase in the minimum wage will certainly harm qualified workers, as wages are being strongly compressed. I predict that people employed on the minimum wage will not be fully willing to improve their qualifications either, because there will not be a significant difference in wages soon,” Damian Guzman, deputy CEO of Gremi Personal, an international employment agency, believes.

(WBJ)