The Position of the Minimum Wage in the Wage Distribution of the Entrepreneurial Sector in the Czech Republic

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JEL classification

• Wage Level and Structure; Wage Differentials
• Wages, Compensation, and Labor Costs: Public Policy

Keywords

Minimum wage, wage distribution, average wage, labour market

Abstract

The minimum wage was first established in the former Czech and Slovak Federative Republic in 1991, currently the issue of minimum wage in the Czech Republic is stipulated by act number 262/2006 Coll., Labour Act. The aim of the submitted article is to identify the position of the minimum wage in the wage distribution of the entrepreneurial sector in the Czech Republic, the outline of the further development in wages with respect to average and median wages and the wages of the 1st and 9th deciles, as well as the outline of the development of the statutory minimum wage. Official sample survey data from the Information system on average salaries from the years 2001-2008 is used (quarterly-period frequency). This data is processed using the method of descriptive statistics. Conclusion can be reached based on an analysis of this statistical data that during the period of time in question all monitored wage categories saw wage rises. However the rise was not uniformly fast or balanced. The wages raised the most in case of the best-paid employees (9th decile wage) and in case of the minimum wage, whereas the 1st decile wage rose the least. The minimum wage amount was not adjusted since 1st July 2006, so the growth in question had been recorded only between the years 2001 and 2006. The development of the calculated indices of the decile ratio can lead us to the conclusion that certain increase in wage differentiation took place, even though this process was not uniform again.