The Institute for Social Policies ‘Musine Kokalari’ calls on the Government of the Republic of Kosovo to consider the effect of social protection when deciding on the new minimum wage level. This would make the minimum wage a tool for overcoming poverty by reducing income inequality, an effective instrument of social protection, and a component of the economic development strategy.
As is known, one of the significant commitments of the Government of the Republic of Kosovo regarding working conditions is the increase of the minimum wage in the country, from 170 (130) euros to 250 euros. This commitment, which has not yet been formalized into a decision, would unify the minimum wage to a single level for all workers, eliminating the existing injustice of wage differentiation based on age groups. Furthermore, it would raise the overall minimum wage level in the Republic of Kosovo.
The Institute for Social Policies ‘Musine Kokalari’ considers that the new minimum wage should take into account the at-risk-of-poverty threshold based on families’ disposable incomes, and should be determined according to the average or median wages calculated from administrative data.
The government, together with social partners, should monitor the effect of setting the minimum wage so that the annual evaluation is realistic and tangible. The executive branch should focus on and approach studies about the effects of minimum wages on variables such as wages, employment, informality, working hours, the gender pay gap, income inequality, or poverty. These studies should monitor the effects of prices and various elements of aggregate demand, including household consumption, investments, and export competitiveness.
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August 27, 2021