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The minimum wage in 2024 and the ZUS contributions for entrepreneurs - Super Księgowy
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The minimum wage in 2024 and the ZUS contributions for entrepreneurs - Super Księgowy

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  • The minimum wage in 2024 and the ZUS contributions for entrepreneurs

The minimum wage is the lowest amount that an employer is obligated to pay to an employee under an employment contract or a contract for services. Typically, minimum wage is received by individuals who lack experience, hold lower positions, or are starting their first job. Over the past years, the minimum wage has been increasing rapidly, and the rise in minimum wage does not make life easier for entrepreneurs, as it leads to an increase in ZUS contributions. How will it look like in 2024?

Minimum wage 2024 – how much will it be and when will it take effect?

On August 1, 2023, a draft regulation of the Council of Ministers regarding the minimum wage for 2024 was introduced to the legislative and programmatic works register of the government. It was published on September 15, 2023. How much will employees earn at least from January? If nothing changes, the minimum wage will be 4242 PLN, but from July 2024, it is set to increase to 4300 PLN. This means that employees will receive 3221.98 PLN net from January and 3261.53 PLN from July. Therefore, the minimum wage will increase by 438.12 PLN in January and an additional 39.55 PLN from July. This will be another record increase in the minimum wage in recent years.

Recall that before the coronavirus pandemic, the minimum wage was 2100 PLN in 2018 and increased to 2250 PLN in 2019. Due to the pandemic, significant increases occurred in the following years. In the pandemic year of 2020, the minimum wage rose to 2600 PLN, then to 2800 PLN in 2021, and 3010 PLN in 2022. In the current year, we had two increases – from January, the minimum wage was 3490 PLN, and from July, it was 3600 PLN. The minimum hourly rates will also increase. From January 2024, the hourly rate will be 27.70 PLN, and from July, it will be 28.10 PLN, whereas in 2023, it barely exceeded 20 PLN, and previously it was below 20 PLN.

How much will the cost of employing a worker increase in 2024?

The increase in the minimum wage in 2024 will translate into an increase in the cost of employing a worker who earns that amount. Many employees still do not realize that employers incur significantly higher employment costs than the gross salary stated in the employment contract. For an employee, the difference between gross and net salary results from the necessity for the employer to pay ZUS contributions (health, retirement, sickness, and disability insurance) as well as income tax. Additionally, the employer also partially covers the employee’s ZUS contributions and must additionally contribute to accident insurance, the Labor Fund, the Guaranteed Employee Benefits Fund, and the Bridging Pensions Fund. Furthermore, contributions to the Employee Capital Plans (PPK) may also be added. Therefore, from January 2024, the costs of employing a worker earning the minimum wage will amount to employers to 5110.76 zł, and from July 5180.64 zł.

The 2024 minimum wage and social security contributions for entrepreneurs

Unfortunately, due to the increase in the minimum wage, both new and longer-standing companies will face an increase in ZUS contributions in 2024. For new companies, the basis for calculating preferential ZUS contributions is 30% of the minimum wage. With a wage of 4242 PLN, the basis for calculating contributions will be 1272.60 PLN. This will result in an old-age contribution of 248.41 PLN, disability contribution of 101.80 PLN, sickness contribution of 31.18 PLN, and accident contribution of 21.52 PLN. The total amount for social security contributions will exceed 400 PLN, totaling just under 403 PLN. Since July 2023, the sum of social security contributions has been 341.72 PLN, so it will increase by as much as 61.19 PLN from the new year. From July 2024, social security contributions will amount to a total of 408.17 PLN, as the basis for calculation will increase to 1290 PLN. The health insurance contribution will also increase. It cannot be lower than 9% of the minimum wage, so it can already be calculated that the minimum health insurance contribution in the new year will be 381.78 PLN, which is 67.78 PLN more than it is now. From July onwards, it will be slightly higher.

With the increase in the minimum wage, the average wage, which is forecasted to be 7794 PLN, will also increase. This also means huge increases in ZUS contributions for companies with longer standing, paying full contributions. Here, the basis for calculation is 60% of the average wage, i.e., 4676.40 PLN. Social security contributions will amount to 1594.19 PLN. Adding the health insurance contribution to this, we will get an amount exceeding 1600 PLN. Over the course of the year, this is a record increase of as much as 175 PLN, or 12.4%.

How have ZUS contributions increased over the past 5 years?

To illustrate how significantly ZUS contributions have increased, let’s now compare their amounts over the past 5 years. We are comparing the amounts of regular, not reduced, contributions. The pension contribution in 2019 was 558.08 PLN, in 2020 it increased to 612.19 PLN, and in 2021 it was already 616.40 PLN. In 2022, it was 693.58 PLN, and in 2023 it reached as much as 812.23 PLN. In 2024, it will increase to over 900 PLN. The disability contribution increased from 228.72 PLN in 2019 to 250.90 PLN in 2020, 252.62 PLN in 2021, then saw a sharp increase in 2022 to 284.26 PLN, and to 332.88 PLN in the current year. In 2024, it is expected to be as high as 374.11 PLN. Moving on to the sickness contribution, which was 70.05 PLN in 2019 and rose to 76.84 PLN the following year. In 2021, it increased by only 53 groszy, then in 2022 it was already 87.05 PLN, and in 2023 it exceeded 100 PLN. In 2024, it is expected to be 114.57 PLN. The accident contribution was only 47.75 PLN in 2019, increased by just under 5 PLN in 2020, and by only 37 groszy in 2021. In 2022, it exceeded 59 PLN, and in 2023 it is about 10 PLN higher. In 2024, it is forecasted to be nearly 10 PLN higher again, at 78.10 PLN. The last remaining contribution to compare is the Labor Fund. This contribution increased from 70.05 PLN in 2019, to just over 6 PLN more in 2020, and a similarly small increase in 2021 as the other contributions. In 2022, it was already 87.05 PLN, and in 2023 it increased to almost 102 PLN. In 2024, it will be 114.57 PLN.

As we can see, entrepreneurs will face another significant increase in the cost of employing workers in 2024, resulting from the increase in the minimum wage and the subsequent increase in the forecasted average wage. For many companies, this will be difficult to bear and will likely result in further price increases, which have already risen significantly due to inflation.