Analyst: V4 Countries See Net Wages Grow, But Slovakia Lags Behind

Bratislava, 2 November (TASR) – The Visegrad Four (V4: Czech Republic, Hungary, Poland, Slovakia) countries have accelerated their net wage growth in recent years, but Slovakia remains at the bottom among them and this development is not the result of employers' unwillingness to raise wages, but of the high tax and levy burden on labour in Slovakia, according to analyst Diana Motuzova from the Club 500. “Employers are increasing wages, but the growth in gross wages is only partially reflected in net wages, as a large part is swallowed by taxes and levies. While other countries in the region have introduced reforms to make their tax and levy systems more efficient or to raise the non-taxable portion of income, Slovakia maintains a system that withdraws significantly more from every euro spent on wages,” Motuzova stated. Based on data from an international consultancy firm called Forvis Mazars, between 2016 and 2025 net wages in the private sector nearly doubled in the Czech Republic, Hungary, and Poland, while in Slovakia they rose by just over half. While the Czech Republic recorded a 77 percent increase, Poland 108 percent, and Hungary 112 percent, Slovakia saw only a 54 percent rise. In 2016, Slovaks had the second-highest net wages among V4 countries; today, they have the lowest. The analyst explained that from the total labour cost, a Slovak employee retains only 51.5 percent, compared to 54.9 percent in the Czech Republic, 57.2 percent in Poland, and 58.9 percent in Hungary. This difference, she said, reflects not only the state's economic performance but mainly the tax and levies system, which increases labour costs while reducing employees' net income. Another important factor affecting wages is the non-taxable portion of income, which used to correspond roughly to the minimum wage but has grown more slowly in recent years. As a result, low-income workers now pay income tax, which limits the growth of their net wages and reduces the impact of gross wage increases. “An effective way to boost net incomes among low-income groups could be to raise the non-taxable portion of income. If the state wants people to have higher net wages, it cannot endlessly increase the tax and levy burden on labour. Slovakia now faces a structural challenge requiring fundamental reform of the tax and levies system. Only by reducing levies and adjusting tax parameters can productivity growth and employers' efforts to reward their workers translate into higher real net incomes,” Motuzova added. mf