Who Is Affected by the Increase of the Minimum Wage in 2026?

GAP Institute has published the policy brief “Who Is Affected by the Increase of the Minimum Wage in 2026?”, which examines the economic impact of the Government of Kosovo’s decision to gradually increase the minimum wage during 2026.

The analysis estimates that the additional cost for businesses from this two-phase minimum wage increase in 2026 will exceed €85 million, representing about 2% of the total wage bill in the economy. It is expected that more than 130,000 full-time workers will directly benefit from this increase, accounting for around 36% of all full-time employees in Kosovo. In addition, part-time workers will also be affected by this measure.

The sectors most impacted by this wage increase include the food and beverage industry, retail trade, and others, where the concentration of low-wage workers is higher.

The average age of workers benefiting from the minimum wage increase is 37, indicating that the main beneficiaries are middle-aged workers who, despite their labor market experience, still earn wages at the minimum level. From a gender perspective, men make up the majority of beneficiaries, accounting for 59% in the first phase and 56% in the second phase of the increase, while women represent 41% and 44% of beneficiaries, respectively.

The econometric analysis conducted by GAP finds no strong statistical evidence of a significant negative impact of the minimum wage increase on employment. However, in line with international literature, potential risks are highlighted for young people and low-skilled workers, as a higher minimum wage may increase barriers to entering the labor market.

GAP Institute recommends that decisions on further minimum wage increases be accompanied by in-depth economic impact analyses based on updated individual-level survey data. This would allow for a more accurate assessment of effects on employment, as well as changes in the quality of working conditions, the number of part-time contracts, and the more precise impact of minimum wage increases on prices, among other factors. In addition, broad consultations with stakeholders should be conducted, particularly with businesses in sectors that employ a high number of minimum wage workers.

The full report can be found by clicking HERE.