With such a wage, people should be able to cover expenses for food and housing, clothing, transportation, health care, education, and free-time activities, but also be able to pay for other important expenses, including savings for unexpected circumstances.
The way a minimum decent wage is calculated differs from how other commonly used instruments for describing and determining wage levels are determined:
An average and median wage are statistical instruments which serve to describe the actual distribution of real wages across society. They tell us about actual wages, although nothing about things from the perspective of expenses, nor the standard of life one is able to attain with such a wage.
A minimum wage serves as a way to politically influence the labor market. Its amount is the result of political negotiations between unions, employees, and the state. Thus, this instrument is also unable to tell us what one can or cannot afford with such a wage.
A minimum decent wage, , on the other hand, attempts to determine in numbers how much a worker needs to earn in order to be able to cover expenses which will afford them a basic material standard. It is based on the assumption that a person working a full-time job should be able to live a decent life. In this way, we bring to the debate the perspective of employees and their living conditions, which, up until this point, has been sorely missing.
A minimum decent wage also differs from instruments that measure poverty, as they aim to capture the situation of households that have a difficulty covering their basic needs (i.e., material deprivation) or that have a significantly lower wage than the majority of society (i.e., threatened by wage poverty); alternatively, such instruments aim to determine in numbers the minimum financial amount needed for survival (i.e., the Czech social policy instrument of a so-called living minimum).
In between the two states of sheer poverty and ensuring a modest material-level of decency lies the still rarely discussed issue of economic uncertainty. This is something that people even employed full-time can experience – they, in fact, can cover the expenses necessary for immediate survival, although many have a problem covering other everyday expenses.
The minimum decent wage instrument, therefore, highlights these people’s situation and their need for a higher wage, which thus would allow them to break free from economic uncertainty.
The minimum decent wage amounted 2019 to 31 463 CZK and 36 850 CZK in Prague. It has experienced an annual growth of 3,1 percent in both cases. For 2020, it was CZK 32 438 gross or CZK 37 987 gross for Prague. The MDW for the Czech Republic for 2021 was calculated at CZK 31,146 gross and CZK 36,717 gross for Prague. In 2022, the MDW amounted to CZK 40 912 gross, while in the capital city, it was CZK 42 776 gross due to the higher cost of living.
The definition of a Czech minimum decent wage and the way that it has been calculated has been influenced by similar concepts from abroad, most notably by the concept of a living wage. In developing countries, the term floor wage is used, which, nevertheless, refers to the poverty level rather than to a decent wage.
Why is it important?
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