Serbia is preparing another significant increase in the statutory minimum wage, with the proposed monthly wage floor for January 2027 set at RSD 70,470, or approximately €600. The proposed level compares with the current minimum monthly wage of RSD 64,554. The minimum hourly rate would also increase, from RSD 371 to RSD 405, representing an increase of approximately 9.2%. The latest adjustment would further raise labour costs for businesses operating with employees whose pay is close to the statutory threshold.
Higher non-taxable salary allowance planned
Alongside the minimum-wage increase, the government intends to raise the non-taxable portion of salaries by a similar percentage. The measure would provide employers with partial compensation for the higher statutory wage floor. For employees, the proposed increase comes as inflation has fallen sharply. If price growth remains contained, the more than 9% nominal increase could result in a substantial improvement in real incomes. The effect on businesses will vary considerably depending on wage structures and the proportion of employees paid close to the minimum.
Labour-intensive sectors face greater cost pressure
The largest direct impact is expected among sectors where significant parts of the workforce remain close to the statutory wage floor. These include retail, hospitality, textiles, food processing, agriculture, logistics and parts of component manufacturing. By comparison, software exporters, financial institutions and capital-intensive manufacturers generally operate with salaries well above the statutory minimum, reducing their direct exposure to the increase. The effect can also extend beyond workers formally receiving the minimum wage.
Companies often maintain wage differences between entry-level employees, supervisors and skilled workers. An increase at the bottom of the salary structure can therefore create pressure to adjust pay for employees immediately above the minimum as businesses seek to preserve existing wage differentials.
Higher wages increase focus on productivity
The latest wage adjustment is taking place amid tighter labour-market conditions. Demographic trends are reducing the available labour supply, while unemployment is substantially below historical levels. Employers are increasingly competing for workers both within Serbia and through the use of imported labour.
The resulting increase in labour costs is pushing Serbia further towards a higher-wage development model. For that model to remain economically sustainable, higher wages need to be accompanied by higher productivity. This increases the importance of automation, workforce training, engineering capabilities, domestic suppliers and higher-value manufacturing within Serbia’s investment strategy.
The changing cost structure also affects the basis on which multinational companies evaluate Serbia as an investment location. The country’s ability to offer relatively inexpensive labour is becoming less significant as statutory and broader labour costs rise. The proposed RSD 70,470 minimum monthly wage for 2027, together with the increase in the hourly rate to RSD 405, represents another step in that adjustment.
