Dignified Life: How Productive We Are, Our Salaries Are ‘Too Polite’

A salary one can live on, which allows for more than mere survival, dignified salary. Such descriptions of a desirable salary are increasingly becoming part of the union discourse in the fight for better earnings for their members. The income necessary for a dignified life, of course, varies from union to union. Although there is no universal measure of the costs of a dignified life, we attempted to investigate what it would be in Croatian terms and what we should be able to afford according to it.

If you ask the New Union, a dignified life in Croatia costs 1800 euros.

– As part of the ‘Clean Clothes’ campaign, we calculated the dignified salary in Croatia. When we released the data in 2021, that amount for Croatia was 1644 euros. Due to inflation, today that net salary which ensures a dignified life would amount to 1800 euros. A dignified salary does not only ensure mere survival, that is, food and housing, but allows an individual to have enough resources for clothing, transportation, attending cultural events, and going on vacation. In Western countries, the minimum wage has approached the dignified level; we are still far from that, says the president of the New Union Mario Iveković, adding that the Constitution defines in Article 56 the right of every worker to earn a wage that can ensure a dignified life for themselves and their family.

Subjective Impression

Given that the current minimum wage is 677 euros, and the average salary is around 1200 euros net, the dignified salary of the New Union seems, at least for now, like an unattainable dream. We also asked many other unions and the Association of Judges about a dignified salary and what it should enable, but they did not respond. Judges have stated in the media that they are seeking 3000 euros, for doctors an even higher amount has been mentioned, while it is not known exactly what the educational staff is asking for, except that the proposed salary increase is unacceptable to them.

A survey by the employment platform Adorio conducted in 2022 showed that most Croatians believe that 8000 kuna is needed to cover living expenses. At that time, the median salary was 6500 kuna, and only thirty percent of people had a salary higher than the mentioned 8000 kuna. What expenses and needs we should be able to cover with a dignified salary is hard to say because such a concept does not exist in economic theory, so its definition is left to subjective impression.

Is Dignified Average?

In defining the amount of the minimum wage, the key criterion is not the living standard it must ensure because it is not fundamentally a measure of social policy; rather, its main goal is to prevent exploitation and significant underpayment of certain groups of workers.

Proponents of using the minimum wage to accelerate the achievement of social goals apply the Keynesian paradigm of the labor market as an argument to justify state intervention in wages, but the use of the minimum wage, although economically justified, has very limited reach. Or, to put it simply, prescribing a higher minimum wage will not magically help increase well-being; instead, a larger mass of workers will equalize in relative poverty.

Although in developed European countries minimum wages are significantly higher than in Croatia, and thus more goods can be obtained for them, in no country does the minimum wage allow for excessive prosperity, but mainly covers basic needs.

The minimum wage, explains economist and university professor Ljubo Jurčić, everywhere only allows for an existential minimum, and one cannot survive on it without an additional family member or additional income.

– A dignified salary is a political-union concept; it does not exist as an economic term. We could perhaps draw a parallel with a welfare society in which most members are satisfied with the standard. If we were to translate that into statistical categories, then it would be the average salary. For it to satisfy basic and some additional needs, the average salary in Croatia would need to be 2000 euros. In that case, the minimum wage would be 1000 euros, explains Jurčić, but adds that for that level of wages we would also need a more developed economy.

Both Simple and Difficult

One of the few countries where a ‘dignified salary’ is calculated is the United Kingdom. The minimum income standard, as it is called there, covers needs, not wants, and necessities, not luxuries. More precisely, it covers things that the public believes are necessary for people to be part of society, so in addition to housing, utilities, and food, it covers expenses for transportation, household necessities, and some social and cultural activities. According to data from the Centre for Research in Social Policy (CRSP) at Loughborough University, which conducts this research, a couple with two children needs about four thousand pounds per month, while a single person needs about 1760.

In Croatia, the situation is even worse, at least according to research by the Central European Labour Studies Institute from Bratislava in 2021. According to its data, a married couple in Croatia with two minimum wages cannot cover basic living costs, which include housing, food, transportation, education, clothing, phone costs, and some basic cultural and social content, as they needed between 1110 and 1330 euros for that in 2012, while at that time the minimum wage was around 566 euros gross.

The story about the level of wages must correlate with reality, and given the Croatian circumstances and the level of GDP, it is clear that the desires for salaries of 1800 euros are in considerable discord with possibilities.

– No one pays you because you are nice, but because you offer a certain service. It is clear that Croatian wages are low compared to our needs or wages in Western European countries, but on the other hand, they are even high when correlated with our productivity. If we want to have wages like in Sweden or Switzerland, then we must also work like Swedes. If you want to have higher wages in the public sector, then you must burden the private sector more, explains economic analyst Predrag Bejaković.

The entire article on dignified salary can be read in the printed or digital edition of the business weekly Lider.