Many individuals working for minimum wage supplement their earnings with under-the-table payments, inadvertently jeopardizing their future pensions. However, the long-term implications of this practice are often overlooked.

Essential professions such as bricklayers, drivers, and interpreters often receive meager wages despite the high demand for their services. Companies, facing a tight job market, offer low wages either out of desperation or as a cost-saving measure, according to experts.

The Czech Labor Office’s latest data from April reveals a significant gap between job vacancies and job seekers. On average, there were 0.9 jobseekers for every job vacancy, with companies seeking 284,530 employees while only 261,683 individuals were actively seeking work through the office.

To investigate further, we analyzed the most frequently offered positions for minimum wage and included higher-rated roles that required minimal education or specialization. We discovered that numerous positions, such as workers, warehouse workers, drivers, servers, cleaners, tattoo artists, dancers, trainers, and masseurs, offered a monthly salary of CZK 17,300 (equivalent to CZK 103.80 per hour). This represents an increase of CZK 1,100 compared to the previous year.

However, according to Jiří Halbrštát from ManpowerGroup, which specializes in recruiting workers for essential professions, companies have slim chances of finding suitable candidates at such low wages. In the current job market, temporary workers performing basic tasks, such as sales or restaurant support, are rarely available for less than CZK 180 per hour, which equates to a monthly income of CZK 30,240.

Halbrštát also notes that while temporary workers hired during periods of increased demand may earn more than permanent employees in the short term, the baseline salary for permanent positions is usually not significantly lower.

Working for minimum wage and relying on off-the-books payments can have long-term consequences, particularly in terms of retirement planning. By neglecting official income records, individuals may inadvertently reduce their future pension benefits. Moreover, the lack of pension contributions from these side incomes can significantly impact one’s financial security during retirement.

It is crucial for individuals and companies alike to consider the broader implications of working for minimum wage and relying on unreported income. While companies may seek to cut costs or address labor shortages, the long-term financial well-being of workers should also be a priority. Adequate wages and proper pension contributions are essential components of a sustainable and secure future for individuals in the workforce.

Article by Prague Forum