A Quarter of Czech Households Living on the Edge

The Czech Republic, once known for its egalitarian society, is facing a growing wealth inequality crisis. Recent data from PAQ Research reveals that over a quarter of Czech households are now living paycheck to paycheck, with their financial stability hanging by a thread.

The impact of the recent inflationary storm has been particularly severe on lower-income families. According to sociologist Daniel Prokop from PAQ Research, there’s been a significant increase in vulnerable and unstable households – those with savings for only two months and no ability to save from their monthly income.

The numbers paint a stark picture. In autumn 2021, 16% of Czech households were financially unstable. By spring 2023, this figure had jumped to 26%. The most at-risk groups include single retirees, single parents, and families with children earning below the median income.

High inflation has disproportionately affected these vulnerable households. For them, the increase in expenses has been significantly higher than wage growth in recent years. Economist Jakub Komárek points out that the Czech Republic’s economic performance since 2020 has been among the worst in the EU.

The wealth disparity in the Czech Republic is alarming. While the average wealth of Czech households reaches four million crowns, the distribution is highly unequal. The poorest fifth of households have an average wealth of only around 100,000 crowns, while the wealthiest fifth boasts an average of 8.2 million crowns.

The country’s tax system further exacerbates this growing inequality. The Czech Republic has one of the lowest property taxes in Europe and doesn’t collect inheritance or property transfer taxes. Moreover, the taxation on capital income is very low, while income from work is heavily taxed.

As the Czech Republic grapples with these economic challenges, it’s clear that addressing wealth inequality and providing support for vulnerable households will be crucial for maintaining social stability and economic growth in the coming years.