In 2025, Serbia will increase its minimum wage by 13.7% to 53,592 dinars, aligning with the minimum consumer basket value and reflecting trends in other European countries. This adjustment addresses slower-than-average wage growth and high inflation impacts on lower-income households, particularly those spending more on energy and food, according to economist Ivan Nikolić’s analysis in the latest edition of Macroeconomic Analysis and Trends (MAT).
Nikolić highlights that the EU Minimum Wage Directive mandates that the minimum wage should be at least 60% of the median wage and 50% of the average wage. This regulatory benchmark has driven the relatively substantial nominal increase in Serbia’s minimum wage for the coming year. He asserts that the minimum wage in Serbia will be guaranteed if employees work full-time and meet standard performance expectations. However, if these conditions aren’t met, wages may fall below the contracted minimum.
According to Biznis.rs, in 2025, the minimum wage will range from 49,280 dinars for 160 working hours to 56,672 dinars for 184 working hours. Tax consultant Zvezdana Pisarević noted that employers who pay the minimum wage will face total costs ranging from 66,244.94 dinars to 76,789.87 dinars per month, including all taxes and contributions.
Nikolić’s analysis also explores whether the minimum wage might harm free competition and employment levels. He contrasts this with the 1980s liberalization, which criticized minimum wages for causing economic issues like rising unemployment and reduced international competitiveness. Nikolić argues that such fears are countered by empirical studies, which show minimal impact on employment and suggest that higher minimum wages can make work more attractive, thereby increasing labor market participation and productivity.
Furthermore, Nikolić notes that higher costs due to increased minimum wages are typically managed through price adjustments, improved productivity, or lower profit margins. He also reminds that the government will offset the wage increase by raising the non-taxable salary threshold to 28,432 dinars in 2025, mitigating potential inflationary pressures.
Nebojša Atanacković, Honorary President of the Union of Employers of Serbia, cautioned that increases in wages without corresponding productivity growth could lead to inflation. However, Nikolić believes that the government’s compensatory measures should alleviate significant inflationary impacts, though some negative fiscal consequences are expected.
