After a 20% yoy increase in the minimum wage in 2h2024, the minimum wage is only expected to increase by 10% in 1H2025. Won’t this help Auto partners absorb wage inflation and restore part of the margin decline that it saw in 2023 and 2024? The minimum wage in Poland doubled over a 5-year period (15% cagr) so a slowdown in the rate of wage increases should help the company get back to normalized margins. The situation should get better in 2h2025 as no minimum wage increase is expected after January 2025
I don’t believe this is the case. A slowdown in the rate of wage growth does not mean wages are decreasing. In fact, a 10% increase remains significant by any standard. It's important to remember that wages are a cost input that affects margins. Auto Partner is selling parts, not labor, so it cannot directly earn a markup on its labor costs. That said, I agree that managing this challenge should become easier for the company after the first half of 2025.
After a 20% yoy increase in the minimum wage in 2h2024, the minimum wage is only expected to increase by 10% in 1H2025. Won’t this help Auto partners absorb wage inflation and restore part of the margin decline that it saw in 2023 and 2024? The minimum wage in Poland doubled over a 5-year period (15% cagr) so a slowdown in the rate of wage increases should help the company get back to normalized margins. The situation should get better in 2h2025 as no minimum wage increase is expected after January 2025
I don’t believe this is the case. A slowdown in the rate of wage growth does not mean wages are decreasing. In fact, a 10% increase remains significant by any standard. It's important to remember that wages are a cost input that affects margins. Auto Partner is selling parts, not labor, so it cannot directly earn a markup on its labor costs. That said, I agree that managing this challenge should become easier for the company after the first half of 2025.