May 1, 2019 - The Government has proposed the motion that the application of the new minimum wage (€222) starts from the 1st July of 2019, said Minister of Finance, Predrag Radunović and reminded that the motion also implied 2% reduction in workload.
There has been heavy criticism in public for the Government’s failure to render this decision earlier. However, the Minister says that the complexity of the issue hasn’t been taken into consideration.
“Any such measure has to be carefully considered – not only through the need for the increase in income of those who get the minimum wage, but also from the aspect of its impact on the employment, business and, of course, state budget. For example, this will obviously increase the burden for the employer. They can react to this by lowering employment. In order to minimize that possibility, we have reduced the mandatory health insurance contributions by two percentage points. Therefore, only when we had carefully considered all the implications of the increase in the minimum wage, were we able to bring this decision”, said Minister Radunović.
Trade unions suggested the increase to €250. That would lead to €41 million annual growth of operating expenses.
“One of the effects, besides reduction in the competitiveness of legal entities and endangering economic growth, would also be the dismissal of employees and that immediately increases informal economy. Also, we must take into account the increase in budget expenses for salaries, pensions, unemployment, social benefits. Right at this moment, that would be very bad for our budget. Increasing the minimum wage to €222, minimizes those risks”, said Mr Radunović.
Representatives of the Government have cited recently that new increase will be next year. The Minister said that the effect of the increase was going to be the key parameter in deciding on the new increase.
“First and foremost, I mean the impact on employment. It would be inappropriate to cite the terms and percentage of the new increase since this one hasn’t been activated yet”, said the Minister.
Mr Radunović added that the improvement of the material position of the employees in Montenegro and their life quality was also the continuous task of this Government.
“That’s not simple. Not at all. Especially not when you opt for the responsible and long-term economic policy, deprived of populist measures and statements. You’ll admit it - it’s quite simple to increase minimum wage when you completely neglect terrible consequences that might ensue. That’s why the Government of Montenegro is trying hard to push this Montenegrin ship forward”, says the Minister.
During this term of office, around 15 000 new jobs have been created with additional positive expectations in this segment.
The Government has announced an all-out offensive against the grey economy. Minister Radunović said that he saw the radical reduction in the grey economy as serious financial potential of this country.
“We are very careful when it comes to the adoption of such measures. An all-out offensive against the grey economy is our continuous responsibility and pre-requisite of our success. Special focus must be shifted towards the illegal service turnover and informal employment”, said the Minister.
He also commented on the fact that around 53,5% of legal entities have one employee.
“The essence of doing business is maximizing effects and minimizing expenses. Apart from regular possibilities and working skills, legal voids, the inefficiency of control authorities, lack of regulation and alike are also widely used. It’s not unlawful to own a company that has only one employee as long as other staff needs are satisfied legally through temporary (but lawful) employment. If that isn’t the case, then it’s clear what it is. Commission for the suppression of the grey economy has to develop the model for controlling obvious abuses that haven’t been identified as such so far”, said Minister Radunović.
Text by CdM on May 1, 2019, read more here.