Polish govt hikes minimum wage as voters fret over cost of living

A construction site with a demolished building is seen near skyscrapers in the centre of Warsaw

WARSAW (Reuters) - Poland's minimum wage will rise by almost 18% in January, the prime minister said on Thursday, ahead of Oct. 15 elections in which the cost of living ranks high among voters' concerns.

Bidding to become the first Polish government since the fall of communism to win three terms in office, nationalists Law and Justice (PiS) are emphasising the impact the introduction of generous social benefits and sharp minimum wage increases have had on voters lives.

After the hike to 4,242 zlotys ($980) a month in January, the minimum wage will rise again to 4,300 zlotys in July, bringing the total increase since PiS came to power in 2015 to 146%. The party has also announced a 60% increase in child benefit payments which will come into effect in January.

"Today, at the Council of Ministers, we adopted the minimum hourly rate, which in 2024 will be 27.70 zlotys," Prime Minister Mateusz Morawiecki told a news conference. "During the Civic Platform government, work for a few zlotys per hour was the norm."

Civic Platform (PO) are Poland's largest opposition party and the leading force in the Civic Coalition (KO) grouping which seeks to topple PiS.

KO spokesperson Jan Grabiec said the prime minister's words did not reflect the real situation of Poles, who have seen double-digit inflation eat into their purchasing power.

"They are looking for some symbol to show that people's lives are not worse, but the fact is that Poles' financial situation is much worse than four, five or six years ago," he said.

Inflation in Poland was 10.1% in August according to a flash estimate from the statistics office, down from a peak of 18.4% in February. Corporate sector wages, which have been rising at a double-digit pace since February 2022, increased 10.4% in July.

"It (the minimum wage increase) is one of the factors that means wage growth will continue to be in double digits," said Piotr Bielski, head of economic analysis at Santander Bank Polska. "It means another year of significant labour costs for companies which will create pressure on prices and will also stimulate demand of course."

($1 = 4.3278 zlotys)

(Reporting by Alan Charlish, Anna Wlodarczak-Semczuk; Editing by Kevin Liffey and Toby Chopra)