The Effect of Current Minimum Wage Changes in the Czech Republic on the Enterprises

Abstract:

The paper is concerned with the institute of minimum wages, legal regulation of the minimum wages in the Czech Republic, and the effects of the minimum wages on the economic activity of the enterprises. The goal of the study is to evaluate, based on data obtained from official sources and on their analysis, the effect of the changes in the minimum wages proposed by the Ministry of Labor and Social Affairs on the social protection of employee rights and on the economic activity of the enterprises. In our study of these problems, we have used the methods of comparison, analysis, induction, and deduction. The analyses are based on data provided by the Czech Statistical Office, the European Statistical Office, the Ministry of Labor and Social Affairs of the Czech Republic, and the Organization for European Cooperation and Development. To evaluate the results of our research we have used the proportional representation of positive and negative answers and the Pearson's chi-squared test. The point of our research is to find out what Czech micro, small, medium, and large enterprises think of the legal regulation of the minimum wages by the Czech Republic legislation, the level of the minimum wages, the effects of the minimum wages on low-skilled employment, the effect of the minimum wages on unemployment, the effect of the minimum wages on enterprise costs and competitiveness. The enterprise owners clearly said that the institute of minimum wages should be preserved. At the same time, however, approximately one half of the respondents are convinced that the minimum wage makes it harder to employ low-skilled workers. Approximately 40% of the respondents said that this institute increases unemployment, has an adverse effect on enterprise costs and reduces the enterprise´s competitiveness. Almost one half of the respondents, however, said that the minimum wages should be raised to CZK 10, 000 or more.