Average monthly salaries in the Czech Republic grew by 8.6 percent year-on-year in the second quarter of this year, according to figures released this week by the Czech Statistics Office. The average wage stood at a record CZK 31,851 at the end of June. In view of a 2.3 percent increase in prices in the same period, real wages rose by 6.2 percent in the second quarter.
Earnings rose particularly quickly in sectors dominated by the state, such as the arts, education and health care. Average monthly salaries have been on an uninterrupted upswing in the Czech Republic since the start of 2014. This can be attributed to the healthy development of the economy and wage growth pressure stemming from a shortage of people on the labour market.
Nevertheless, a full two-thirds of employers make less than average salaries. The median wage grew by 9.4 percent in the first quarter to reach CZK 27,236.
Raiffeisenbank analyst František Táborský told the CTK news agency that the median wage was growing at its fastest rate since 2008.
In practice this means that those on low salaries are seeing their pay packets expand more quickly than those on higher wages.
Viktor Zeisel, an analyst with Komerční banka said that wage growth had reached an “unbelievable tempo” in the first quarter, achieving the fastest dynamic in 15 years once price growth was taken into account. This trend continued in the second three-month period of 2018, he said.
Lukáš Kovanda, chief economist at Cyrrus, said pay growth in the second quarter had outstripped market expectations. However, salaries will continue to shoot up and should hit the CZK 34,000 level in the final quarter of this year.
But the trend probably won’t stop there. ING Bank analyst Jakub Seidler said salaries should increase by six or seven percent in 2019.
Deloitte analyst David Marek said salaries were growing fastest in sectors dominated by the state because politicians and election dates were actually deciding pay rises, not demand or productivity. Mr. Marek said it was good that growing salaries were contributing to higher living standards. However, wages cannot continue to rise at the current rate, he warned.
As ever, Prague was the region with the highest average wage in the second quarter at CZK 39,688, reflecting year-on-year expansion of 6.9 percent. Central Bohemia saw the fastest pay growth between April and July, with 10.7 percent year on year for a monthly average of CZK 33,873. The Karlovy Vary region continues to have the lowest pay, with an average of CZK 27,741.
Lukáš Kovanda, Ph.D., je český ekonom a autor ekonomické literatury. Působí jako hlavní ekonom Trinity Bank. Analyzuje a komentuje makroekonomická témata, investice i nové fenomény typu sdílené ekonomiky, kryptoměn či fintechu. Přednáší na Národohospodářské fakultě Vysoké školy ekonomické v Praze.
Je členem vědeckého grémia České bankovní asociace.