Minimum Wage 2027: Serbia Offers 405 Dinars an Hour

The Finance Ministry opened the first round of negotiations over the 2027 minimum wage with an offer of a 9.2 percent increase: the minimum hourly wage would rise from 371 dinars to 405 dinars, or 70,470 dinars a month (about 600 euros), starting January 1, 2027. Neither of the other two parties at the table has accepted the proposal so far.

The first meeting took place on August 10 in the three way format of the Social and Economic Council, where representatives of the unions, employers and the Government of Serbia sit together. When we first wrote about the starting point for these talks, the only figure on the table was the existing 65,554 dinars. Now the government has put forward a concrete proposal, and it is already clear that the unions consider it too low, while some employers consider it too high.

What a 9.2 percent increase means

Serbia’s current net minimum wage is about 65,000 dinars (roughly 550 euros). The proposed 70,470 dinars would give a minimum wage worker about 5,500 dinars more a month, assuming the number of working hours stays the same. Converted to euros at the current exchange rate, that is a shift from about 550 to about 600 euros.

Nebojsa Atanackovic, honorary president of the Serbian Employers’ Union, laid out after the meeting exactly what had been put on the table:

“The government’s proposal is for the minimum wage increase to be 9.2 percent over the current amount, that is, for the increase to go from 371 dinars to 405 dinars per hour, which comes to 600 euros a month. The unions are confused by this, because certain politicians from the ruling party had said that by the end of next year the minimum wage would be 650 euros.”

Alongside the figure itself, the ministry also raised the question of support for employers, so that the increase does not hurt companies operating on thin margins.

Where does the unions’ 650-euro figure come from?

The representative trade unions are demanding a minimum wage of 650 euros, and they are not citing their own estimate but an earlier target the Government of Serbia itself announced: that the minimum wage would reach that level during 2027, with the average salary reaching 1,400 euros. Finance Minister Sinisa Mali had previously stated that the minimum wage would reach 650 euros by the end of 2027, and that is what shaped the unions’ expectations going into the talks.

Milos Miljkovic, executive secretary of UGS Nezavisnost, described the gap between the offer and what unions expected:

“Employers, even though they had proposed somewhat less, can, as far as I can tell, agree to this proposal. We, as unions, honestly expected it to be higher.”

Zoran Ristic, an adviser for economic and social affairs at the same union, measures the demanded 650 euros against the cost of the consumer basket rather than a percentage increase:

“If we look at the average consumer basket, which is a more realistic indicator of the cost of living than the minimum wage itself, we can conclude that even 650 euros is not enough to cover basic existential and social needs.”

Unions also used the meeting to raise the issue of overall wages, particularly wage compression in the public sector, where employees in very different jobs end up earning similar amounts. According to Ristic, government representatives acknowledged the problem but put off discussing it under a different agenda item.

Employers are working with about eight percent

The Serbian Employers’ Union told the meeting that what the economy can bear is around 8 percent, calculated as inflation plus GDP growth. That leaves a gap of about 1.2 percentage points versus the ministry’s proposal, a narrower gap than the one between the government and the unions.

Ljiljana Pavlovic, head of the Membership Sector at the Serbian Employers’ Union, set out the condition under which employers would accept an increase:

“Employers support rising living standards for workers and rising wages, but that growth has to be sustainable. The minimum wage needs to track growth in productivity, economic activity and the capacity of the economy, so that an increase doesn’t lead to job losses, delayed investment or part of the business moving into the grey economy.”

What employers are asking for in return comes down to three points:

• further cuts to taxes and contributions on wages
• an increase in the tax-free portion of wages
• continued tax relief, so that more of the increase reaches the employee without raising the employer’s cost

The third demand has a track record behind it. The tax-free portion of wages rose from 16,300 dinars in 2020 to 34,221 dinars a month in 2026, more than doubling in six years. Employers have used that lever in every previous round of talks and are counting on it again now, since it lowers their costs without touching the amount workers see on their paycheck.

What gets decided on Wednesday

The next round of talks is scheduled for Wednesday, August 12. Atanackovic believes a final agreement will be reached then. Three questions remain open: whether the government sticks with 9.2 percent, whether the tax-free portion of wages moves again, and whether the unions get an answer on when the minimum wage will reach 650 euros.

If the parties fail to reach an agreement at the Social and Economic Council, the minimum wage for the coming year will be set by a government decision.