Selected issues of the minimum wage in the Czech Republic

The minimum wage can be defined as the lowest possible level of remuneration that an employer can pay to an employee for his work. In the world there are basically two mechanisms of the minimum wage settings. The first is determination of the minimum wage by law (the legal regulation) and it is called the statutory minimum wage. The statutory minimum wage can be applied either to all sectors or selectively only to certain sectors. The second mechanism is the setting of minimum wages by collective agreements. They could be collective agreements at the company level or higher level collective agreements, i.e. applied to certain sectors or particular professions [2]. It is common that in addition to the basic rate of minimum wages, there are special reduced rates, such as for young workers or for persons with disabilities. Within the European Union, all Member States apply some form of minimum wages. Most of them (twenty) use the statutory minimum wage and other Member States determine the minimum wage by collective bargaining. The minimum wage is the measure of economic policy which raises conflicting views. Opponents of the minimum wage mostly emphasize its negative impact on employment and often disagree with its social function. On the contrary, its proponents emphasize its importance in the fight against poverty, in the creation of incentives to work, in reducing the imbalances in labour relations (limiting the power of employers) or in reducing wage inequality between the bottom and middle of the income distribution [9]. Some proponents of the minimum wage also question the negative impact of minimum wages on employment and even state that, under certain conditions, the minimum wage could lead to employment growth. Finally, proponents of the minimum wage indicate that the minimum wage in today's globalized world can prevent wage and social dumping [18, p. 3]. For the first time the minimum wage was introduced in New Zealand and Australia in the 1890’s. In the Australian state of Victoria, the law on minimum wage was approved in 1896, under which the labour authorities were created that defined the lowest wages for five selected "sweated" industries. One of these industries in the state of Victoria was the textile industry, in which workers often created production outside the premises of the employer (e.g. at home). The United Kingdom adopted similar law in 1909. In 1938, under the Fair Labour Standards a minimum wage was enacted in the United States. In its early days, the institute of a minimum wage was introduced as a measure for the eradication of poverty in the "sweated" industries. Gradually, however, the applicability of the minimum wages widened. E.g. Canada and New Zealand gradually increased the force of the minimum wage from some sectors to almost all industry at the beginning of the twentieth century. Since its introduction in 1991, the minimum wage has undergone several stages of development in the Czech Republic. In some periods the minimum wage was increased, and in some periods it stagnated. This uneven development has had an impact on the labour market. One of the objectives of this article is to describe the development of the institute of the minimum wage in the Czech Republic. Attention will be given not only to the gross nominal minimum wage, but also the development of the real and the net minimum wage. The second objective of the article is to assess whether the minimum wage fulfills its motivational function, i.e. if it pays for people to work or if it is better to live on social benefits. The final part of the article is devoted to an analysis of the impact of changes in the minimum wage on unemployment in the Czech Republic. In addition to the impact of changes in minimum wages on total SELECTED ISSUES OF THE MINIMUM WAGE IN THE CZECH REPUBLIC