Minimum wage should be the exception, not the rule

While we are waiting for the decision on the amount of the minimum labour price for the next year, let's remind ourselves what the actual value of minimum wage is and what it should really represent.

Negotiations on the amount of the minimum wage for 2022 are underway. At the previous meeting, the Social and Economic Council of the Republic of Serbia (SES) did not take a position on the issue of the minimum wage, said Milos Nenezić, chairman of the body, opening a press conference after Friday’s meeting. Negotiations continue today.

Although, as usual, employers and trade unions have different standpoints in these negotiations, the relevant Ministry, as well as the President of the Republic of Serbia, announced an increase of the minimum monthly salary to 35,000 RSD (roughly 300€) even before the negotiations started. It remains to be seen whether an agreement will be reached at the SES meeting, or the decision will once again be made by the Government.

The right to a minimum wage is regulated by Convention No. 131 of the International Labour Organization (i.e. Minimum Wage Fixing Convention) which Serbia has ratified. This convention guarantees that the minimum wage cannot be reduced. The Convention also lists the conditions that need to be taken into account when determining the level of the minimum wage at the national level. These conditions imply the needs of workers and their families. Being so, in addition to the general wage levels in the country, the negotiators and decision-makers are obliged to take the cost of living and the relative standard of living into account. 

The fact that this year’s announced increase in the minimum monthly salary to 300€ will cover less than half of the average consumer basket, which amounted to 76,184.63 RSD (650€) in May this year, shows how much the minimum wage in Serbia corresponds to the cost of living. According to the data provided by the Statistical Office of the Republic of Serbia, the average net salary in Serbia for the same month was 65,025 RSD (550€). It’s obvious that even the average salary is not enough to cover the cost of the average consumer basket. It should be added that over 80% of employees receive a salary lower than the average.

Contrary to the usual practice of regarding the minimum wage as the only guaranteed financial compensation that employees can count on, the Labour Law of the Republic of Serbia actually introduces the minimum wage in order for it to be used in times when a business operates poorly, whereby such wage payment is limited in time; as stated in the Law: “After the expiration of six months period from the rendering of the decision on introduction of minimum salary, the employer is obliged to inform the representative trade union of the reasons for continuing to pay out minimum salary”.

Experts emphasize that it’s necessary to introduce a guaranteed salary in the amount of the average consumer basket. As Mario Reljanović stated for Istinomer: “Guaranteed pay is an institution that should protect workers, while the minimum wage serves to protect the employer”.

Thus, the minimum wage, which should be paid exclusively in the period when the business is doing poorly, is often abused in Serbia because it is equated with guaranteed pay. Unions warn that every sixth employee in Serbia is paid minimum wage, and the same number receives only ten per cent more. In addition, there are over 220,000 people in Serbia who receive social assistance that is not enough for even a quarter of the minimum consumer basket.

Compared to its neighbours, Serbia is somewhere in the middle. In Croatia the minimum wage this year was around 450€; in Slovenia the minimum wage is prescribed to be at least 20% above than the value of the minimum consumer basket, so this year it is 736€ net, and a lower minimum than in Serbia can be found in Montenegro and Bosnia and Herzegovina.

According to the unions, in Serbia the minimum wage does not suffice for even a so-called reduced consumer basket, on which no one can survive. Its value is similar in Montenegro, where three minimum salaries are needed for an average living standard. In Croatia workers need two minimum salaries for an average standard, while in BiH you need more than three minimum monthly salaries to fill a consumer basket for a family of four.


Translation: Iskra Krstić

This article was ORIGINALLY PUBLISHED in Serbian on Aug 23, 2021.


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