Polish Government to Rise Minimum Wage By 8% in 2025

The Polish government’s minimum wage is set to increase by 8% in 2025. While workers and unions welcome the move, many business groups are sounding the alarm, arguing that it could hurt small and medium-sized enterprises (SMEs) across the country.

The government’s draft regulation outlines an increase to 4,666 zloty ($1,090) per month starting January 2025, slightly higher than initially proposed.

What Does the Polish Government’s Minimum Wage Increase Mean?

The Polish government’s minimum wage hike is a significant change. This adjustment, an 8.5% increase from current levels, follows months of discussions. Initially, the government planned a smaller increase. But the latest proposal raises the figure by an additional 40 zloty ($9.34) per month.

Retell / Per the new minimum wage hike, the hourly wage is set to rise, reaching 30.5 zloty ($7.12), up by 0.3 zloty from the June proposal.

While the news is a victory for workers who have been advocating for higher wages to keep pace with inflation, it is a cause of concern for business owners. The Polish Chamber of Trade has voiced strong opposition, fearing that the increased wage costs will place a heavy burden on businesses, particularly smaller ones.

So, for many employees across Poland, the minimum wage rise is seen as long overdue. Inflation has been eating into household budgets, and the increase will help alleviate some of the financial strain faced by workers on lower incomes. A higher wage means more disposable income, which could stimulate consumer spending in the broader economy. Workers in sectors like retail, hospitality, and manufacturing, who are typically paid minimum wage, stand to benefit the most from this change.

Business Concerns Over the Minimum Wage Hike

On the other side, business leaders are worried about how this increase will affect their bottom lines. Small and medium-sized enterprises (SMEs), in particular, feel they could be disproportionately impacted.

Elevate / Pexels / According to the president of the Polish Chamber of Trade, Maciej Ptaszyński, higher labor costs could lead to widespread closures of small businesses.

Ptaszyński argues that the government’s move might be detrimental not only to SMEs but also to the overall economy. Increased wage expenses could force many businesses to cut back on hiring or even lay off workers to offset the financial strain. Rising operational costs, coupled with inflationary pressures, are expected to squeeze profit margins, especially for businesses that already operate on tight budgets.

What Is the Polish Government’s Rationale?

The government, however, believes that the minimum wage increase is necessary to protect workers from the rising cost of living. Inflation has been a major issue in Poland, as in many other parts of Europe, and wages have not kept up with the rising prices of goods and services. By raising the minimum wage, the Polish government aims to ensure that workers are not left behind in an increasingly expensive economy.

Economists supporting the wage hike argue that higher wages could lead to increased consumer spending, which in turn could fuel economic growth. In their view, the short-term pain for businesses may be offset by long-term gains for the economy. Supporters also point to the fact that Poland’s unemployment rate remains low, suggesting that the economy is strong enough to absorb the wage increases.

Small and medium-sized businesses will undoubtedly feel the pinch of the higher wages. SMEs often have less financial flexibility compared to larger corporations, and the additional costs could push some to the brink. For many, cutting down on staff or reducing hours may become inevitable strategies to cope with the rising wage bill.