How will the indexation mechanism work?
minimum wage formula:
coefficient * average gross wage = minimum wage (rounded up to the nearest hundred)
- by 31.8., the Ministry of Finance publishes its forecast of the average gross wage for the following year
- by 30.9., the government sets coefficients for the next 2 years (for example, in 2024 for 2025 and 2026; the next coefficients will be set in 2026 for 2027 and 2028)
- by 30.9., the Ministry of Labour and Social Affairs announces the following year’s minimum wage using the formula above
The coefficients are intended to reflect purchasing power in relation to living costs, wage levels, wage growth and long-term national productivity, all in consultation with the tripartite social partners. How this will work in practice remains to be seen. 🙂
The aim is greater predictability and linear growth in the minimum wage, which should reach 47% of the average wage in 2029.
Minimum wage levels for 2025 and 2026
Minimum wage for 2025:
- coefficient: 42.2% of the average wage
- minimum wage: CZK 20,800/month
- minimum wage: CZK 124.40/hour
Expected minimum wage for 2026:
- coefficient: 43.4% of the average wage
- expected minimum wage: CZK 22,500
The figure for 2026 is only an estimate! We do not yet know the average gross wage on which the 2026 minimum wage will be based.
Abolition of the guaranteed wage
This Labour Code amendment also brings the abolition of the guaranteed wage in the private sector. For public-sector employees, a guaranteed salary will be introduced, setting minimum salaries in 4 job categories.
Does payroll still feel like a puzzle? At a consultation, we will work out how to tackle it.