The Czech Statistical Office has announced that the average monthly salary in 2005 increased by about 5.5% to approximately CZK 19,000 (€668). Taking inflation into account, the real increase in salaries amounted to 3.5%. This is the lowest annual wage increase since the separation of the former Czechoslovakia in 1992, and comes at a time of unprecedented economic growth.
Last year, the average salary in the private sector increased by 5.2% to CZK 19,053 (€670); after inflation, the real increase in wages was 3.2%. In the public sector, the average salary increased by 6.7% to CZK 18,954 (€667) and the real increase in wages was 4.7%. This difference in wage increase may be explained by the pay adjustment for employees in public services and administration since 1 January 2005. The figures are reported by the Czech Statistical Office (Ceský statistický úrad, CSÚ).
Differences by sector, occupation and company size
Hotels and restaurants recorded the lowest relative wage growth, at 3%; trade and repair of automobiles and of household appliances recorded similarly low growth. Other sectors with lower than average wage growth included fish breeding and catching, where wages increased by 4%. Conversely, public administration and defence recorded the highest relative wage growth, amounting to 8.9%, followed by activities in real estate and leasing (8%), and energy and water production and distribution (6.9%).
At the same time, wage gaps are also widening in terms of company size and occupation. For example, the highest nominal salary in financial services was almost three times higher last year than the nominal salary in hotels and restaurants. Internationally owned companies pay the highest average salaries over the long term (CZK 23,814 (€838)), while cooperative enterprises pay the lowest salaries (CZK 12,658 (€446) on average).
In the last quarter of 2005, the average gross monthly salary – after subtracting seasonal influences – increased by 1.4% in comparison with the third quarter. From a year-on-year perspective, wages in the fourth quarter of 2005 were higher by 4.8%, compared with the same period in 2004. However, as consumer prices increased by 2.4% in the last quarter of 2005 in comparison with the same period the year before, a growth in real wages of 2.3% occurred in the fourth quarter.
Thriving economy
Although employee wages in the Czech Republic increased last year at the slowest rate to date, in the same period, the country’s economy attained its best result in the history of the Czech Republic, with economic performance rising by a full 6%. Foreign trade did especially well; in addition, there was significant growth in investment, and household consumption also increased. The Czech Statistical Office has published more precise fourth quarter data on gross national product (GNP) growth: in all quarters of 2005, economic performance was higher than originally anticipated.
Reaction to the results
Both economists and trade union representatives have responded to the caution practised by Czech businesses with respect to wages. The former group generally commend the slow growth in wages, while the latter take the opposite viewpoint. For example, Milan Štech, Chair of the Czech-Moravian Confederation of Trade Unions (Ceskomoravská konfederace odborových svazu, CMKOS) – the largest trade union alliance in the country – and senator for the Czech Social Democratic Party (Ceská strana sociálne demokratická, CSSD), recommended a greater emphasis on collective bargaining with respect to wages: ‘We anticipated growth of 4% to 5%. The result was disappointing and confirms that the pressure on increasing salaries should be greater.’
Wage pressure not anticipated
However, according to the findings of a recent survey carried out by the daily newspaper Hospodárské noviny among 20 businesses in various sectors, greater pressure on wages is not anticipated, nor are any trade union protests regarding wage developments. This applies not only to prosperous companies active in, for example, the automobile industry – which is at the forefront of the country’s economic growth – but also to less affluent companies in textiles production or trade, for example, where the level of remuneration is much lower. For 2006, most collective bargaining agreements have been concluded, and new wage negotiations are generally not planned by trade unions.
Among others, the Deputy Prime Minister for the Economy, Jirí Havel, emphasised that the Czech Republic has, in comparison to other post-socialist countries, the highest wages and relatively low unemployment. Some economists also draw attention to the fact that the growth of Czech wages corresponds to the current growth in labour productivity.
Jaroslav Hála, Sona Veverková, Research Institute for Labour and Social Affairs, Czech Republic