The Montenegrin Employers Federation (UPCG) has called on the government to postpone concluding a new general collective labour agreement until the financial implications of the proposed Euro Model wage reform are fully established.
Employers say companies need a clear picture of minimum salaries, taxes, social contributions and additional obligations under a collective agreement before preparing their payroll budgets.
The government maintains that the reform would significantly reduce taxes on labour. A Finance Ministry representative illustrated the expected impact with a monthly net salary of €1,250, which, under the proposed system, would generate approximately €62 in taxes and contributions. This would bring the total employer cost to around €1,312.
The government compared this with nearly €800 in taxes and contributions associated with the same salary under the previous system. These figures represent projections and are not provisions of legislation currently in force. UPCG is concerned that savings from lower payroll taxation could be offset by increases in statutory salaries and additional requirements introduced through a new collective agreement. In that case, companies could face a higher overall labour bill despite reduced tax rates.
The issue has particular significance for tourism, retail, construction and services, where employee costs represent a substantial share of operating expenditure.
Higher wages could strengthen household consumption and help retain workers in sectors experiencing labour shortages. Employers warn that salary increases unsupported by productivity growth could put pressure on prices, recruitment and investment. The reform also raises questions about public finances. Lower taxes and contributions on labour could reduce government revenue collected per employee. The expected offset would depend on growth in formal employment, declared wages and consumption.
For businesses, the immediate concern is the ability to calculate future employment costs before accepting further obligations under a collective agreement. UPCG is therefore seeking greater clarity on the complete cost structure rather than opposing wage increases themselves. The debate over the Euro Model consequently extends beyond proposed salary levels to the overall cost of employing workers under the new system.
