The average gross wage in Q1 2022 increased by 8.6% compared to the same period the previous year to CZK 41,265, but it fell by 6.7% due to inflation. The median wage was CZK 34,741, according to data published by the Czech Statistical Office (CSU) on Monday.
The real fall in the average wage by 6.7% reflects that consumer prices rose 16.4% in the first quarter, said Jitka Erhartova, head of labor statistics.
The average wage rose 2.2% when adjusted for seasonal factors compared to the previous quarter.
The median wage, the midpoint of salaries, rose by 8.9% YoY to CZK 34,741. For men, the median wage was CZK 37,696, and for women, it was CZK 31,856—eighty percent of employees earned between CZK 18,601 and CZK 65,512.
Wage development varied significantly by industry. Only in the energy sector did wage growth exceed inflation, with salaries in the industry rising on average by 23.1% to CZK 79,221. “This development was related to the payment of exceptionally high extraordinary rewards,” CSU said in its labor market analysis.
In all other sectors, wages fell in real terms. Statisticians recorded the most significant YoY decline in education, where purchasing power fell by 10.7%. Meanwhile, the average salary in banking and insurance fell by exactly one-tenth in real terms.
Economist: Wage-Inflation Spiral Not a Threat
“Overall, today’s numbers show that a wage-inflation spiral is still more of a theoretical scenario or risk for us, but it does not require a response in the form of interest rate hikes. Real earnings have been falling sharply for the second year in a row, along with household consumption, which is, incidentally, one-tenth lower than before the pandemic,” said Petr Dufek, chief economist at Creditas.
Jakub Seidler, the chief economist at the Czech Banking Association, warned that in terms of the development of real wages, the economy is at the level of Q1 2017, the lowest in the last six years.
“The slightly weaker dynamics of wages in the first quarter then reduces hawkish arguments and confirms that CNB interest rates will remain unchanged and may start to decline slightly between this and next year,” Seidler added.