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Despite Crisis, Minimum Wages Outpace Overall Pay Growth

Ljubljana, 10 April (STA) - The growth in minimum wage outpaced overall wage growth for the fourth year in a row in 2012, which closed the gap to a level that puts Slovenia at the top of the EU rankings, according to a report by the Institute of Macroeconomic Analysis and Development (IMAD).

At EUR 783.66 gross, Slovenia has the seventh-highest minimum wage among the 19 EU members which have statutory minimum wages, behind only wealthier countries such as the UK, France, Ireland and Netherlands.

With average wages stagnant, the minimum wage grew to account for 50% of the average wage in 2012, a share set to grow further as the minimum wage rose 2.7% this year as a result of indexation to inflation.

Only Malta (50.4%) and Greece (50.1%) have similar ratios, whereas in other countries minimum wages range between 33% and 47% of the average wage, according to the latest issue of IMAD's Economic Mirror.

The development is the result of the statutory yearly increase in the minimum wage, which has been rising throughout the crisis, compounded by the 22.9% surge in the minimum wage in 2010, at the peak of the economic crisis.

In January 48,625 employees received minimum wages, 8.3% of the total and more than double the number before the 2010 legislative changes.

Interestingly, the number of minimum wage recipients in the public sector grew from less than 500 to over 6,000, a result of last year's pay cuts implemented with the omnibus austerity act.

"Against the backdrop of one of the steepest decreases in economic activity in the EU, Slovenia recorded the highest increase in the minimum wage," IMAD says, noting that in some other countries minimum wages either stagnated or remained level.

"In the period 2008-2012 the minimum wage increased by almost 30% in real terms, which had a positive impact on reducing pay inequality...but created huge pressure on the cost effectiveness of the economy and job loss," the report says.

When the minimum wage rise was put into effect in 2010, IMAD estimated it would lead to the short-term loss of 5,000 jobs. The report however gives no estimate of how many jobs were actually lost as a result.

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