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Low-wage workers to earn more

THE ROBERT Fico Cabinet has introduced a reform of payroll taxes of low-wage workers to increase their wages and reduce unemployment. The Slovak Cabinet approved the measure on November 20.

THE ROBERT Fico Cabinet has introduced a reform of payroll taxes of low-wage workers to increase their wages and reduce unemployment. The Slovak Cabinet approved the measure on November 20.

“The reform has the ambition to positively influence employment and interest in employment of people with lower skills and in less developed regions,” Martin Filko, director of the Institute of Financial Policy (IFP) governmental think tank said, as cited by the TASR newswire. “Thanks to a higher net wage the offer for work would increase.”

The measure introduces the so-called payroll taxes’ deductable item of €380 per month, reducing the base for calculation of compulsory health insurance contributions. This way it reduces health insurance premiums paid by workers as well as their employers while the maximum gross wage on which it would apply should be €570.

After the new measure is applied the net minimum wage should increase by €32 to €339 next year while the cost of labour, which includes the salary of the worker and all compulsory contributions paid by the employer, should remain at its current level.

The reform should affect more than 600,000 employees, while annual fiscal costs are estimated at €152 million.

The cabinet is introducing the measure to halt protests of employers against the robust increase of the minimum wage by 8 percent, or €28 to €380, as of 2015.

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