In the Czech Republic, up to 65,000 people depend on regular wage advances to make ends meet. These individuals, typically with significantly low incomes, live paycheck to paycheck. Without these advances, they would be forced to take out highly disadvantageous loans, potentially leading them into a debt trap, according to Tomáš Ervín Dombrovský from Alma Career, the company behind Jobs.cz and Práce.cz.
A recent advertisement offering weekly wage advances for laborer and warehouse positions highlights the prevalence of this practice. According to an April survey of employees, around fifty percent report difficulties managing their finances from one payday to the next. Of these, three percent believe wage advances from their main employer would help them, and one percent already utilize this option.
Interestingly, more people find additional income to be a more effective solution to their financial woes than wage advances. Two-thirds of those in financial distress express interest in supplementary earnings, and 24 percent already benefit from this. Currently, eleven percent of all employees have a side job or project, typically under agreements like work performance contracts. Two-thirds of these employees work for different employers, while one-third juggle additional roles with their primary employer.
The prevalence of wage advances is more common in regions with higher instances of debt and executions, such as North-Western manufacturing firms. These companies often provide advances to help employees earn minimum wage or slightly above it, up to CZK 25,000 per month. In heavily indebted regions like Ústí nad Labem or Karlovy Vary, the proportion of indebted employees in some firms can exceed twenty or even thirty percent.
Overtime is another significant means of compensating for insufficient income, with 41 percent of employees regularly working extra hours. Of these, around 80 percent report their overtime as documented and paid. Half of those working overtime say it significantly boosts their income, while 27 percent state that overtime pay constitutes a substantial portion of their earnings.
The financial situation has been exacerbated by the dramatic impacts of inflation and the Russian aggression against Ukraine. Real incomes have fallen drastically since the end of 2021, particularly affecting low-income individuals who spend much of their earnings on housing, energy, and food. Although there has been a slight improvement recently, the financial situation remains worse than before the conflict in Ukraine.