Increase in the national minimum in Poland – will creditworthiness increase?

The subject of minimum wage has been arousing a lot of emotions for years, unfortunately the most negative ones. The pattern is still the same: the rulers promise an increase in payouts, and then either make cosmetic changes or do not make them at all, and payers complain that hunger rates are paid to them. It is difficult to reach a compromise that would immediately satisfy both sides of this conflict, which is why the minimum rate increases gradually, using the small steps method. It is difficult to say to what amount the tactics will ultimately lead us, for now the loud pay rise is being commented on. How much will the national minimum increase? Does it have a chance to increase the creditworthiness of potential borrowers? Let’s find out.

Minimum wage 2019

Minimum wage 2019

Before we change the amount of the minimum wage in Poland, let’s check what is hidden under this name. Labor law states that the minimum wage is a pre-determined, lowest salary that an employee employed under an employment contract can receive in full time. His qualifications, personal grade, components of remuneration or working conditions, determined individually by the employer, do not matter here. If he pays the employee a wage below the minimum wage, this constitutes a violation of his employee rights and may be reported to the National Labor Inspectorate. In justified cases, control is then initiated, and if it confirms what the employee has reported, the employer faces a fine of PLN 1 to 30 thousand.

Here, our attention is to wait for monthly settlement with the notification of the Inspection, because it may turn out that our remuneration includes a bonus that equalizes the basic remuneration. This is a lawful procedure and employers use it relatively often. To take care of your interests, however, remember that the minimum wage does not include jubilee bonuses, night work allowances, severance pay (due to retirement or retirement) and overtime remuneration. These elements cannot constitute the minimum gross amount of PLN 2250 – because the Ministry of Labor decided about this amount this year.

In practice, such a decision means earnings at the level of approx. PLN 1634 net, i.e. PLN 104 more than last year (gross is PLN 150). In the case of specific civil law contracts (mandate contracts), the rate increased from 13.70 to 14.70 PLN gross per hour. The Central Statistical Office data shows that about 1.4 million people will benefit from this, because this is the number of employees receiving the minimum wage. Along with these increases, benefits such as severance pay for group dismissal, remuneration for downtime or the basis for maternity and sickness benefits are also higher.

Changes in the minimum national payment for work also mean increases for employers, which few of us remember. Since the salary increased by PLN 150 gross, the costs of employing an employee will amount to approx. PLN 170, because he is required to pay contributions from his own company finances.

Increase of the national minimum and credit standing

Increase of the national minimum and credit standing

Although the amount of earnings is one of the main factors taken into account in the process of calculating creditworthiness, we do not think for a moment that larger amounts on the account will open the door for all banks. Financial institutions, wanting to check our financial situation, will also check monthly fees and any debts, marital status, age, and even education and professional profile. Having an employment contract, and therefore a fixed monthly income, will definitely be appreciated by the bank, even if we work for a national minimum. And if there are any doubts as to the amount of credit or loan, due to low earnings, consultants will simply offer us a product with a lower financial value, more suited to the amount of our remuneration.

We will encounter more adversities if we work, for example, on a mandate contract. It will not be an obstacle if we change the lender’s number of such contracts (some of them require continuity at the level of 6 months, others need 12), but we must remember the more commonly used tendency to understate net income. Some banks may take into account only 50% of our salary, others will focus on 80% – we have no influence on this, it is the internal findings of the institution. For us, earning a minimum rate, this is not the best news – we have little chance of receiving a loan, since, according to the bank, we have a creditworthiness of several hundred zlotys.

Bank loans

Bank loans

Taking a loan from a bank, when the lowest domestic bank receives every month on our bank account, will undoubtedly be a challenge. Before we endeavor to receive it, make sure that we are not burdened with any other obligations which, in the case of such income, will certainly cancel our chance of signing a loan agreement. Important are not only any unpaid installments – let’s not forget about maintenance. Labor law regulates the amount of deductions from salary, in the case of maintenance is 3/5 of the salary. As for other debts, half the payout may be taken from us. When we are sure about the amount we have every month, let’s compare the offers of several lenders.  With earnings at the national minimum level, finding an offer with the lowest interest rate will be particularly important.

How to check your credit standing?

How to check your credit standing?

To find out if we have sufficient creditworthiness for the bank to grant us a loan, we have two options. First, go to a branch and ask for help from a bank employee. In addition to calculating our creditworthiness, it will also provide us with products that we can use. The second solution is to use the creditworthiness calculator. We enter such a password in the search engine and proceed to fill in the following fields: net income, monthly loan installments, living expenses, number of people on the farm, loan period and interest rate. The calculator will generate the answer for what loan amount we can count not only in PLN, but also in foreign currency. Unfortunately, this is not such a precise tool as bank employees have, because it does not take into account, inter alia, credit collateral, e.g. in the form of real estate. In the final analysis this may turn out to be very important, which is why we recommend comparing the results from the calculator with those that can be presented to us directly in the institution.

Even if our national minimum monthly account reaches our account, this does not stop us from using banking products to improve our financial liquidity. To find out all the available options, it is worth meeting a financial advisor who knows how to manage such remuneration better than us. It is possible that we will still be able to save anything or even invest.