EFFECTS OF THE ADJUSTMENT OF THE MINIMUM WAGE ON LABOUR COSTS AND PUBLIC REVENUES IN THE CZECH REPUBLIC AND SLOVAKIA

The minimum wage represents the lowest level of costs for employees' wages for employers. There are two possible forms of regulation of the minimum wage: The minimum wage determined by law or negotiated by a collective agreement. The Czech Government is empowered to issue the regulations for implementing the Labour Code. The minimum wage is always valorised as a political decision of the specific government. The aim of this article is to evaluate the effects of minimum wage valorisation on labour costs and public revenues in the Czech Republic and in the Slovak Republic with regard to the development of selected macroeconomic indicators - unemployment and economic growth. Key foreign studies were studied in order to determine the effects of minimum wage of labour cost, revenues from personal income tax and social and health insurance in the Czech Republic and Slovakia. A comparison is presented by the development of the Kaitz index, real GDP growth rate and unemployment rate an analysis of the effects of these indicators on public revenues in the Czech Republic and Slovakia. If the minimum wage is too low, employers are tempted to pay undeclared wages; if it is too high, companies incur excessive costs. The number of employees earning the minimum wage in Slovakia is roughly the same as in the Czech Republic. The industries with the highest ratio of low-income employees in the Czech Republic and in the Slovak Republic included accommodation and food service activities and administrative and support service activities. Kaitz index in the Slovak Republic is higher compared to the Czech Republic in the long run. The average labour costs per employee in Slovakia are higher than in the Czech Republic. The Slovak economy is strongly affected by high unemployment rate. The difference between the poverty line and the minimum wage in Slovakia is significantly higher, compared to the Czech Republic. Increasing minimum wage results in increased labour costs, improved social status of most employees and increased revenue on social and health insurance.