Montenegro’s proposed Euro Model wage reform could increase the cost of existing government and municipal construction contracts by €30 million to €40 million in 2027, with contractors preparing to request amendments to agreements awarded before the planned changes to minimum wages.
Estimates from the construction industry indicate that prices under existing public works contracts could rise by 20–30% to reflect higher labour and material costs. The potential increase would affect infrastructure expenditure and budgets for projects already under implementation.
The proposed reform would increase minimum monthly wages from €600 to €1,000 for workers in the lowest qualification category, from €600 to €1,250 for employees with secondary education, and from €800 to €1,400 for university graduates.
Construction companies maintain that their existing bids were calculated using considerably lower labour costs. They are therefore considering requests to revise procurement agreements to account for expenses that could not reasonably have been anticipated when the contracts were awarded.
Major Infrastructure Contracts Face Higher Cost Exposure
The potential financial impact extends to some of Montenegro’s largest infrastructure investments. A €693 million design-and-build contract for the Mateševo–Andrijevica motorway section was signed in February, followed by a €237 million contract for the Budva bypass in June.
Both projects are planned for implementation over several years, exposing contractors to changes in labour expenses and construction material prices throughout their execution. Domestic suppliers of construction materials have also indicated that price increases may be necessary, creating additional cost pressures for companies implementing public infrastructure projects.
Contractors Seek Contractual Price Adjustments
The construction industry is considering amendments to existing agreements to compensate for the expected increase in operating expenses. Chairman of the construction and building materials committee at Montenegro’s Chamber of Economy, said contractors would seek revisions to procurement contracts to address cost increases that were not foreseeable when their bids were submitted.
The industry has pointed to the precedent set in 2022, when the government accepted revisions to construction contract prices following exceptional increases in building costs associated with disruptions in international markets.
Similar requests could now be submitted under contractual price-escalation provisions. The possibility of obtaining adjustments and the amounts that could be recovered would depend on the conditions of individual agreements and applicable public procurement rules.
Business Associations Raise Concerns Over Wage Increases
Business associations have advocated a more gradual adjustment of minimum wages, arguing that a rapid increase could weaken the competitiveness of companies and place additional financial pressure on employers. For the public sector, the potential consequences extend beyond higher payroll expenditure. Infrastructure budgets approved before the wage changes may prove insufficient to cover the actual costs of contracted construction works.
An increase in expenditure on existing projects could also leave less funding available for new infrastructure investments unless additional budget allocations are provided.
The projected €30 million to €40 million increase remains an estimate by the construction industry rather than an approved increase in public spending. Its eventual impact will depend on the legislation adopted, the documented additional costs incurred by contractors and the government’s decisions on requests to amend existing agreements.
