From 1 January 2020 the minimum wage increased to CZK 14,600. An increase of CZK 1,250 from the CZK 13,350 valid in 2019 represents the largest increase in history. This is the result of a compromise between trade unions that demanded growth of CZK 1,650 and employers who wanted an increase of maximum CZK 700. Currently, the minimum wage represents 40.5% of the average wage.
The minimum wage increase impacts also the growth of the lowest levels of guaranteed wage. The guaranteed wage sets the lowest price of work for a fixed weekly working time of 40 hours, graded according to its complexity, responsibility and effort. The guaranteed wage ranges from the minimum wage in the first group (e.g., kitchen assistants, mail delivery) to twice the minimum wage in the highest eighth group (e.g., financial and business bosses of organizations, financial and capital market broker).
Given that many of the limits in the Income Tax Act are tied to the minimum wage, its increase also has tax implications. Specifically, the following amounts will be applicable to personal income taxation in 2020:
Last but not least, the increase of the minimum wage also has an impact on the payment of health insurance premiums for persons without taxable income, which now amounts to CZK 1,971 per month (in 2019 it was CZK 1,803).