The minimum salary of 500 euros: Who wins, who loses?

Thousands of workers in Kosovo are expected to benefit from the minimum wage hike of 500 euros per month, which went into effect on 1 July.

But it remains unclear whether this increase will translate into a literal improvement of their standard of living, in the face of inflation and continued price hikes

So far, no detailed official analysis of the impact of this growth or the purchasing power of households has been published.

Experts, with whom Radio Free Europe spoke, estimate that the new minimum wage is not enough to cover a family's monthly expenses in Kosovo.

Albin Kurti's government, now acting prime minister, made that decision in October 2025, on the eve of local elections, as it took effect in two phases in January and July 2026.

The decision affects some 150,000 private sector workers, according to officials.

Lack of a Fable Study

The incumbent Minister of Finance, Iron Murati, had said after the decision to raise the minimum wage that it came after “analysis and the discussions we have had, as well as the proposals and suggestions we have received from union and business representatives”.

But Murat's claims are rejected by the chairman of the Kosovo Economic Oade (OEK), Lulzim Rafuna, who accuses the Government of not including Oda and businesses in analyzing the impact of the new minimum wage.

We haven't consulted. We haven't seen any reports, any studies. This is exactly our” request, Rafuna says of Radio Free Europe.

Economist Safet Gerjaliu estimates that the government of “politicised” the minimum wage, bypassing other actors from discussions about the impact before making the decision.

No salary, either minimal or average, should be politicised, because this only harms the economic and social aspect. And, in this direction, definitely, the minimum wage must be discussed and calculated on inflation growth trains”, he explains for Radio Free Europe, broadcasts Periscope.

Is that enough growth?

The minimum wage, now 500 euros, was initially raised to 425 euros in January, up from 350 in advance.

With an inflation increased by about 6.8 per cent, and a slow-down economy, according to the International Monetary Fund, the new minimum wage in Kosovo will not help improve the welfare of citizens, experts say.

Under real circumstances, in a stable economy, it has had to gain citizenship, but given the fact that we are an import-dependent state and close to 90% of family revenues go into consumption, then much more will earn trade and import, than citizens and state”, Gerjaliu estimates.

A research published in 2024 by the Institute for Social Policy “Mousine Koklari” in Pristina has found that a 4-member family in Kosovo spends an average of more than 1,100 euros per month on food, housing, education, health and transport.

In urban areas, expenditures total over 1,200 euros, while in rural areas around 1,090 euros.

Rafuna says the minimum salary of 500 euros “does not cover the families' real life costs and needs in Kosovo.

He adds that the government has been able to come with a better decision on minimum wage, as if allowing opportunities OEK to bring proposals after talks with its representatives, with members of Oda, but with non-members.

The Effect on Business and Informacy

Economy experts predict a negative impact on businesses, which, according to Gerjalut, “has not been prepared for something like this to happen since they were not consulted by the Government.

The whole “will primarily affect contraction or reduction of jobs, the order of demand for workers, and, of course, as the third effect will also be the attempt for informality”, he estimates.

Rafuna, on the other hand, agrees that businesses can be affected, but does not think there will be increased informality.

“According to our data, there will be no informality, because [...] the private sector has moved pretty well with wages as a result of time, but also as a result of the demand for good and quality workforce within the company”, he relates.

It explains the impact on high businesses and new businesses, or start-up.

“to medium-sized businesses, challenging is the burden, that even the minimum wage threshold has increased, but has not been released from personal income tax”, he says.

For example, Kosovo's neighbour Albania in January raised the minimum wage to 50,000, or 500 euros, and decided it would not be taxed

Kosovo's incumbent Finance Ministry did not answer Radio Free Europe's question whether to meet minimum wages.

Rafuna says the new situation will be a very challenging “for even small businesses, because “ato is in the first steps, in the first few days, and the minimum wage of 500 euros will certainly push or limit the staff number, or re-organise”. /Periscope