Scientific Papers

JOURNAL OF INTERNATIONAL STUDIES


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ISSN: 2306-3483 (Online), 2071-8330 (Print)

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The impact of minimum wage increases on unemployment in the V4 countries: Assessing the recommendations of the European Commission

Vol. 17, No 3, 2024

 

Andrea Tkacova

 

Faculty of Economics

Technical University in Košice, Slovakia

andrea.tkacova@tuke.sk

ORCID 0000-0002-6025-1261


The impact of minimum wage increases on unemployment in the V4 countries: Assessing the recommendations of the European Commission

Beata Gavurova

 

Technical University of Kosice, Faculty of Mining, Ecology, Process Control and Geotechnologies, Institute of Earth Resources,

Košice, Slovakia

E-mail: beata.gavurova@tuke.sk

ORCID 0000-0002-0606-879X


Barbora Gontkovicova

 

Faculty of Business Economics with seat in Košice,

University of Economics in Bratislava,

Slovakia

barbora.gontkovicova@euba.sk

ORCID 0000-0002-6955-7208

 

 

 

Abstract. The European Commission has recently implemented legislative measures to improve worker protection through an adequate minimum wage set by national laws or collective agreements. A recommended benchmark for minimum wage calculation is 60% of the gross median wage or 50% of the mean wage. However, the Kaitz index, a ratio indicator, shows lower values in most EU countries, raising concerns about potential negative impact on the labour market. This study aims to identify the impact of the Kaitz index and several other selected variables on unemployment in the V4 countries. Using multiple linear regression, we concluded that the Kaitz index’s growth does not uniformly impact unemployment in the V4 countries. Specifically, in Slovakia and the Czechia, the Kaitz index growth appeared to increase unemployment, in line with neoclassical economic theory. In contrast, Hungary and Poland did not register significant effects. Gender differences were also noted, with the Kaitz index affecting female unemployment in the Czechia and Hungary, and male unemployment in Slovakia. The research results suggest that increasing the minimum wage in the V4 countries is feasible if its growth rate is higher than that of unemployment benefits and the living minimum, but lower than the average wage growth, and if it is supported by economic growth.

 

Received: October, 2023

1st Revision: June, 2024

Accepted: September, 2024

 

DOI: 10.14254/2071-8330.2024/17-3/3

 

JEL ClassificationA13, C32, C51, E24, J38, J64

Keywordsunemployment, minimum wage, average wage, Kaitz index, V4 countries