The Committee on Labor, Demographic and Social Policy in the National Assembly approved in the first reading changes to the Labor Code, which regulate a new mechanism for determining the minimum wage for the country. This was reported by the press center of the Ministry of Labor and Social Affairs.
Four socio-economic criteria will be taken into account to determine the amount of the minimum wage:
- the purchasing power of the minimum wage for the country, taking into account the cost of living, which will be determined by the average annual change in the price index of the small basket;
- the general level of wages and their distribution, which will be determined by the annual change in the gross median wage of full-time employees;
- the growth rate of wages, which will be determined by the annual change in the average gross wage of employees;
- the long-term levels of labor productivity in the country, which will be determined by the annual changes in the gross value added per employee at comparable prices for the past 10 years.
The minimum wage for the country for the next year will be determined in a range with a lower and upper limit. The lower limit will be the amount of the minimum wage for the current year, and the upper limit will be determined by a formula based on the four criteria that participate with equal weight in it.
The procedure for determining the minimum wage will be carried out in two stages by August 15 of the current year. The first stage includes bilateral negotiations between trade union and employer organizations, which must agree on its amount in the range between the lower and upper limits. In the second stage, the Council of Ministers will determine the minimum wage for the country for the next year, taking into account the report prepared from the negotiations between the social partners.
Every three years, an assessment of its adequacy will be carried out based on two reference values - 60% of the gross median wage and the cost of living. The assessment of adequacy will be carried out by a commission with the participation of social partners.
The Labor Code creates a legal definition of the minimum wage - the lowest basic monthly wage for time worked or according to the work done.
"The current automatic mechanism binds the minimum wage to 50% of the average gross wage for the previous 12-month period. This mechanism does not take into account key socio-economic criteria," said the Minister of Labor and Social Policy Natalia Efremova. According to her, the new mechanism is consensual and includes internationally recognized criteria and reference values for assessing the adequacy of the minimum wage.
Efremova emphasized that the purpose of the new mechanism is to guarantee adequate incomes for those working on a minimum wage and to ensure stability and predictability in planning the activities of enterprises and the state budget.
The changes to the Labor Code provide for the possibility of collectively negotiating higher minimum wage amounts in a collective labor agreement at the sectoral and branch level.