development report 2012 - UMAR

190 Development Report 2012
Indicators of Slovenia’s development
Minimum wage
In 2011, the minimum wage recorded higher growth
(5.7%) than the average gross wage, so that the
ratio between the two increased, to 47.1%. As a
result of the possibility of a gradual transition 1 to the
statutory amount and January’s adjustment, 2 the
lowest provisional minimal wage totalled EUR 698
(6.7% higher than in 2010), while the statutory amount
was EUR 748. The average gross minimum wage paid
rose by 5.7% in 2011, which is much less, on average,
than in 2010 (14.6%), when the new Minimum Wage
Act became effective in March. Its growth was again
much higher than growth in the average gross
wage (by 3.7 p.p.), which was modest due to the
slow recovery of economic activity and the austerity
measures in the public sector. The ratio between
the average minimum wage paid and the average
gross wage thus rose again in 2011 (according to our
calculations, from 45.4% to 47.1%). Similar to previous
years, Slovenia is thus ranked in the upper third of EU
countries, according to Eurostat’s data, but taking
into account the statutory amount of the minimum
wage, it is at the top of the EU. In 2011, around 80%
of minimum-wage earners were already receiving the
highest level of minimum wage. 3
The number of minimum-wage earners increased
further in 2011 and more than doubled relative to
the period before the adoption of the new Minimum
Wage Act. The number of minimum-wage earners
rose by 12.9% year-on-year in 2011 and more than
doubled relative to 2009 (from 19,047 to 43,565).
The share of minimum-wage earners in all employed
persons increased as well, from 6.2% to 7.1% in 2011
(2009: 3.0%). The latest comparable data for EU
Member States are available for 2007 and show that
Slovenia also ranks in the upper bottom of the scale
on this indicator. 4 Around 90% of all minimum-wage
earners are in the private sector and their number
1
A gradual transition to the new minimum wage level was
possible if an immediate increase would have resulted in a
substantial loss and threatened the existence of a company, and
only in agreement with the representatives of workers.
2
On 1 January 2011, the minimum wage increased by the yearon-year
rise in consumer prices at the end of 2010 (1.9%).
3
Due to the possibility of different minimum wage levels, AJPES
first collected data separately for three ranges of the minimum
wage. In 2010, they amounted up to EUR 654, between EUR
655 and 685 and between EUR 686 and 734 in 2010. After the
adjustment in 2011, only two ranges remained, up to EUR 698
and between EUR 699 and 748. In March 2010, around 60% of
recipients had already received the highest level of minimum
wage, and this share was growing throughout the year.
4
The highest shares are recorded in France (12.9%), Bulgaria
(12.4 %), Luxembourg (11.0%) and Latvia (9.2%), and the lowest
in Spain (0.7%), Slovakia (1.6%) and the United Kingdom, Malta
and Hungary (all around 2.0%).
rose to 38,975 last year (2009: 18,596). In the private
sector, 5 the share of minimum-wage earners rose
from 3.8% to 8.6% in 2009–2011. In the public sector,
the increase was tenfold (from 0.3% to 3.0%, or from
451 to 4,590 recipients), but the share of recipients
was still much lower than in the private sector. In
comparison with the situation before the new act,
the number of minimum-wage earners in the private
sector rose most notably in trade (from fewer than
2,000 to nearly 8,000) and manufacturing (from
more than 6,000 to more than 12,000). These two
sectors and miscellaneous activities, together with
construction and accommodation and food service
activities, employ more than three quarters of all
minimum-wage earners. 6 With the exception of trade,
these activities are, on average, characterised by the
low educational level of employees.
In the previous two years, the increase in the
minimum wage contributed to a rise of wages in the
private sector, a decline in the share of low-wage
earners and in income inequality, but at the same
time also to job loss. Based on the dynamics of wages,
we estimate that in 2011 nearly a percentage point of
wage growth in the private sector is attributable to the
impact of higher minimum wage. In 2010, this impact
was much larger (a solid 3 p.p.). A small influence on
wage growth is also expected in 2012. At the same
time, the increase in the minimum wage and a relatively
fast transition to its statutory level were reflected in
lower inequality of income distribution as measured
by the Gini coefficient and interdecile coefficient (9 th
decile/1 st decile). 7 According to the latest available
data on the distribution of wages, in 2010, inequality
declined on both indicators. The share of low-wage
earners, 8 which had until then been rising ever since
2005 (17%), also dropped (from 19.3% to 17.9%).
According to the latest European Union Structure of
Earnings Survey, the comparable share in the EU as a
whole totalled 17.2% in 2006. However, according to
the econometric calculations, the significant increase
in the minimum wage also contributed to job loss. In
the short term around 5,000 persons are estimated to
have lost work due to the higher minimum wage, and
in the long term around 17,000. 9
5
The private sector included activities A–N, R–S, the public
sector activities O–Q.
6
In manufacturing 28.7%, in trade 18.1%, in other miscellaneous
business service 13.3%, construction 10.1% and accommodation
and food service activities 5.8%.
7
Calculated from data on the distribution of persons employed
with legal entities with regard to the level of the gross wage.
8
According to the OECD’s methodology, these are full-time
workers who receive less than two-thirds of median earnings, i.e.
in 2010 up to EUR 864.
9
See the IMAD Working Paper, No. 3/2010 (Brezigar et al.:
Estimation of the Impact of Minimum Wage Rise in Slovenia