Slovenia's Ministry of Labour explains new minimum wage increase - EXCLUSIVE

CE Report presents an exclusive interview given by a source in the Ministry of Labour, Family, Social Affairs and Equal Opportunities of Slovenia, providing a detailed explanation of the recent increase in the minimum wage, the methodology behind its calculation, and the anticipated impacts on both employees and employers across the country.

Could you provide details on the methodology and calculations used to determine the 16% increase in the minimum wage?

Pursuant to the Slovenian Minimum Wage Act (Official Gazette of the Republic of Slovenia, Nos. 13/10, 92/15 and 83/18; hereinafter: Act), the minimum wage cannot be lower than 120% of minimum costs of living (MCL) and cannot exceed 140% of MCL. Minimum costs of living are calculated at least every six years (or more frequently) based on accepted and comparable methodology.

In addition, the said Act stipulates that the minimum wage shall be adjusted every year at least for the year-on-year inflation (consumer price index). Subject to discretion of the minister in charge of labour, the adjustment may be higher when taking into account other relevant factors, such as GDP growth, average wage growth etc. This is particularly relevant in light of the Directive (EU) on adequate minimum wages in the European Union.

In January 2025, the Government of the Republic of Slovenia committed, in unanimous agreement with social partners, to provide a new calculation of the minimum costs of living. Employers, trade unions, and the government agreed this was necessary since the minimum wage was only adjusted by the lowest permissible rate for two years in a row, and lagged behind the inflation in especially food and non-alcoholic beverages, residential rents, and other basic costs of living.

In December 2025, the Institute for Economic Research, working with the National Institute of Public Health and the Statistical Office of the Republic of Slovenia – i.e., three independent research/expert institutions – completed a new study of minimum costs of living that determines them at a net amount of EUR 791.07 per month.

Based on this amount, and taking into account the Slovenian income tax law and social security contributions, new gross minimum wage according to the Act should be between EUR 1,372.03 (120% of MLC) and EUR 1,648.28 euros (140% of MLC). The minister responsible for labour set the new amount of the minimum wage at approximately 126 % of newly calculated minimum living costs, which amounts to a gross minimum wage of EUR 1.442,92. This amount was then adjusted for the increase in consumer price index in 2025, as required by the Act. With the year-on-year inflation (December/December) at 2.7%, the minimum wage for the year 2026 was set at EUR 1,481.88.

How does the government anticipate the increase will affect both employees and employers, particularly in terms of household income and business costs?

First, it has to be stipulated that the approximate 16 % increase of gros minimum wage does not mean an increase of labour costs by the same amount. Due to the minimum base for social security contributions payment set at 60 % of average wage of previous year, all employers already have to pay employers social security contributions from this amount (in 2025 1.436,95 euros) and majority of difference between paid employee’s contributions based on their wage and the 60 % of average wage. Increase of labour costs in January 2026 (total labour cost to employer) is thus estimated at approximately 11%. This increase should not carry a too high of a burden for companies in Slovenia, especially having in mind that the minimum wage increases in 2024 and 2025 were among the lowest in the EU and that average wage in previous two years rose significantly higher than the minimum wage (2024: MW 4,2 %; AW 6,2 %; 2025: MW 1,9 %; AW 7,5 %). Amount of company profits are stable and the labour market in Slovenia is performing at historical records (low unemployment, high employment, high activity shortage of workforce).

Despite the limited influence of the minimum wage on the disposable income of larger households (with children), due to the effects on social and family transfers and income tax, the increase in minimum wage significantly improves the disposable income of single households, first-time employees, youth, migrants, and women. It reduces the risk of poverty and mitigates the inequality trends. The new net minimum wage (at approximately EUR 1.000) is above the most recently calculated at-risk-of-poverty threshold, calculated in 2025 for the year 2024, which amounted to EUR 981. Increase of the minimum wage also corresponds to high inflation rates of basic living necessities (food, shelter, energy etc.) in recent years and should alleviate some of the pressure on lower-income households.

Are there measures planned to monitor and mitigate potential impacts on the public sector wage structure and employment levels?

With the reform of public sector wage system in 2025, monitoring structures were established to monitor the implementation of the new system and any other possible influences. The Ministry of Public Administration and the Ministry of Finance are in this respect closely cooperating also with the public sector trade unions. Increase of the minimum wage will increase the expenses for wages in the public sector by approximately EUR 80 million in 2026, which is approximately a 1.3% increase of total public sector expenses for wages relative to 2025 (EUR 5.890 million). Possible issues of compression in the lower part of the wage structure will be addressed in the future if necessary.

How does the government assess the possible effects of the minimum wage increase on inflation, competitiveness, and the broader economy?

As stated, the minimum wage increases in 2024 and 2025 were among the lowest in the EU and the average wage in these two years increased at a significantly higher rate than the minimum wage. Increase of the minimum wage for 2026 follows two years of minimum increases of the minimum wage due to global and EU instabilities and shocks. Having this in mind, companies were given some space in terms of labour costs to adjust to new circumstances. Amount of companies’ profits rose to EUR 6 billion a year in years 2022–2024 and remained at one of the highest levels in history. Considering predicted stable GDP growth, low unemployment rates and growth of the average wage, higher minimum wage also contributes to the restructuring of the economy in the direction of higher capital investments and added value. Increase of minimum wages has a limited increase on the whole wage structure thus significant inflation pressures are not predicted.

Recent studies of the impact of minimum wage increase on inflation put the effect of the 11 percent increase in total labour cost at 0.1 to 0.3 percentage points over a period of 3 to 5 years. In case of the most recent price surge (in 2022), the Bank of Slovenia found that wages contributed significantly less to the increase of the GDP deflator than corporate profits (the contribution of corporate profits to the increase in the GDP deflator was 6 times higher than the contribution of unit labour costs).

Moreover, an increase in minimum wage also motivates the employers with the lowest value added to invest in productivity increases. Considering the high and stable profit rate, low private-sector investment rate, and a lag in productivity, we believe the increase in minimum wage could decrease reliance on relatively cheap labour and spur structural improvements in the Slovenian economy.

What steps will be taken to ensure that additional benefits linked to the minimum wage, such as holiday allowances and Christmas bonuses, are implemented smoothly?

In the past, no significant negative influences were noticed on other labour rights in the context of minimum wage increases. The Minimum Wage Act, which determines the amount, rights and obligations in the context of the minimum wage, and Labour Relations Act (Official Gazette of the Republic of Slovenia, Nos. 21/13, 78/13 – popr., 47/15 – ZZSDT, 33/16 – PZ-F, 52/16, 15/17 – odl. US, 22/19 – ZPosS, 81/19, 203/20 – ZIUPOPDVE, 119/21 – ZČmIS-A, 202/21 – odl. US, 15/22, 54/22 – ZUPŠ-1, 114/23, 136/23 – ZIUZDS in 70/25 – ZUTD-I) and Act on the right to Winter Holiday Allowance and the Revision of the Determination of the Tax Base by Taking into Account Standardized Expenses (Official Gazette of the Republic of Slovenia, Nos. 91/25) that determine the holiday and winter allowances and other bonuses all fall under the jurisdiction of Labour Inspectorate of the Republic of Slovenia. No additional activities were planned in this respect.

This interview was prepared by Julian Müller