Minimum wage increase could boost informality

An increase in the minimum wage in Kosovo may increase informality in employment. This is the assessment of business representatives and economics experts, who call for business supervision so that employees are not harmed.

The Government of Kosovo has approved a Draft Law that paves the way for the increase of minimum wage to 250 euros net, and 300 thousand employees are expected to benefit from the decision.

With the new draft law, workers with minimum wage are also expected to be spared from tax.

Chairman of the Kosovo Business Alliance, Agim Shahini, told Radio Kosova, that if the tax on the minimum wage is removed, there is no risk of informality in employment.

"Because taxes are removed and this paves the way for the legalization of workers in the workplace. But if this salary is taxed in the future, then there is a risk that part of the employees may go into informality. I think this is good but dangerous," he said.

Meanwhile, economy expert, Safet Gërxhaliu, tells  Radio Kosova, that the increase is delayed, even though there are calls for business supervision, due to the risk of informality.

"There needs to be a genuine dialogue so that this salary does not affect the increase of informality, where many businesses will try to pay the workers, by not registering them in the tax. In this regard, it is time when there should be implemented and not just voting, said Gërxhaliu.

At a time when inflation is rising every day, this is not enough for the monthly basket, tells RTK professor of economics, Berim Ramosaj.

Namely, the chairman of the Independent Trade Union of the Private Sector, Jusuf Azemi, in a recent conference, said that a 250 euros minimum wage was unacceptable. According to him, it should be at least 400 euros. According to official data published by KAS, in March, inflation in Kosovo reached 10 percent, compared to March 2021.

Autor: Radio Kosova