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Increase in Wages for Czech Employees: Implications for Businesses

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Increase in Wages for Czech Employees: Implications for Businesses
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In a significant shift for businesses in the Czech Republic, companies participating in the Qualified Worker Program will be required to offer international workers a minimum gross wage of CZK 29,120 (€1,148.78), excluding bonuses. This represents a substantial increase compared to current wage levels.

According to a report from Svet Prumisly, this wage adjustment will not only affect foreign workers but also compel companies to raise wages for their Czech employees. The changes, set to take effect next year, pose a considerable financial challenge for many businesses, especially those unprepared for the additional costs.

Currently, most manufacturing companies offer base wages between CZK 23,000 (€907.32) and CZK 26,000 (€1,025.64). A mandated increase to CZK 29,120 would require significant budgetary adjustments. Companies that fail to prepare could face severe financial strain.

For instance, a manufacturing company employing 1,500 workers, with 200 international employees under the Qualified Worker Program, and a current base wage of CZK 24,500 (€966.57), would need to raise the base wage for all employees to CZK 29,120 (€1,148.92). This would result in an increased wage expenditure of CZK 4,620 (€182.25) per employee, leading to a total additional monthly cost of CZK 6,930,000 (€284,130). Factoring in social security and health insurance contributions, the company’s annual wage costs could rise by as much as CZK 111,268,080 (€4,561,991.28).

These changes may force businesses to rethink their participation in the Qualified Worker Program, which is currently the only viable option for companies to hire foreign workers legally. Discussions among the relevant ministries are ongoing, as they seek to find solutions to the growing concerns from the business sector.

The potential financial burden of this wage increase could have lasting impacts on the competitiveness of Czech companies, especially those in manufacturing, as they struggle to absorb the increased costs. Further developments are expected as ministries continue to negotiate the finer details of the new wage requirements.

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