Title: Is minimum wage a good policy for poor workers in Croatia
Abstract: Minimum wage is an instrument of the labour market introduced because of the principle of fairness and dignity for workers who are incapable of covering the basic personal and household needs. Today, the minimum wage policy has gone beyond the economic sphere and has become an economic, social and political issue. In this paper, the authors analyze the profile of the minimum wage worker in Croatia and trends in minimum wage coverage, which is brought into connection with the poverty of workers. The characteristics of minimum wage workers and their status on the labour market are the most significant components in the analysis of minimum wage because this is the starting point in the creation of policy according to the needs of its beneficiaries. One of the aims of the minimum wage is convergence towards the total elimination of poverty among the working population and it is, therefore, a priority to obtain information on the share and profile of poor workers. The analysis pointed out the poor efficiency of the minimum wage policy in the context of decreasing poverty, i.e. increasing the income of poor workers. Therefore, the authors present some alternative instruments which can be seen as complementary to the minimum wage policy. The combination of several instruments enables a more efficient and faster achievement of goals that the minimum wage fails to realize, before all a higher income for poor and low-wage workers. The government needs to be careful in designing the minimum wage policy and take into consideration the final aim which is the maintenance of a dignified wage threshold for the vulnerable groups of workers. It would be wise to create a combination of the minimum wage policy, the welfare policy and the fiscal policy with the aim of protecting the vulnerable groups of workers, as well as the unemployed, by stimulating employment, i.e. activity on the labour market.(ProQuest: ... denotes formulae omitted.)1. MINIMUM WAGE POLICY IN CROATIAIn the Republic of Croatia, the Minimum Wage Act (hereinafter: MWA) came into effect on July 1, 2008 and it set the amount of the minimum wage, the modality of harmonization and the implementation of surveillance. Before the MWA, the issue of minimum wage was not regulated by law in Croatia but rather by the 1998 National Collective Agreement on the amount of the lowest wage which determined that this amount could not be lower than the lowest base for the calculation and payment of contributions for pension and disability funds.Until 2003, this lowest base was determined by the Ministry of Finance after which it was determined by the Statutory Insurance Contributions Act and was equal to the product of the multiplication of the average wage for the period from January to August of the previous year and the coefficient 0.35. In 2008, the MWA established that all workers working in the Republic of Croatia have the right to the minimum wage.The national minimum wage refers to the worker who works full-time, i.e. 40 working hours a week while the workers working less than 40 hours a week, in keeping with the interpretation of the MWA, would have the minimum wage determined in the same ratio to the minimum wage paid for full-time work. Table 1 shows the movement of the relationship of the nominal and real minimum gross wage from 2000 to 2011. The highest increase of the (nominal/real) minimum gross wage is visible in the year when the MWA came into effect and it amounted to 12.5%. In the observed 24 half-years, the nominal minimum gross wage changed nine times with an average semiannual increase of 2.17%.When calculating the amount of the minimum wage, the existing Act uses the average wage indicator and the GDP growth rates in the previous year. The Croatian Bureau of Statistics (CBS), when calculating the amount of the minimum wage, increases that amount by the GDP growth rate, i.e. it uses the following formula:... (1)where:MW - minimum wage,φW - average wage,GDP - growth rate of the real GDP in the previous year,t - current year,t-1 - previous year. …
Publication Year: 2014
Publication Date: 2014-06-16
Language: en
Type: article
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Cited By Count: 4
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