Private vs. Public Sector: Wage Parity Achieved in Czech Republic

In recent years, the wage gap between the state’s average earnings and the Czech Republic’s private sectors has significantly narrowed. Indeed, data shows that the private sector has caught up with the public one. This is based on the average earnings for the first half of this year, rounded to thousands, the “Information System for Average Earnings” (ISPV) reveals.

According to Pavel Peterka, Chief Economist of Roklen, the main reason for this parity is the consolidation of the state budget and more significant pressure on private companies regarding wage growth. This shift is seen as a result of efforts to stabilize public finances, where salaries in the public sector did not grow at the same speed as in the private sector.

According to ISPV data, during the first half of 2023, the average earnings in the public sector reached 45,406 CZK. In contrast, in the private sector, the average salaries, or wages, were 45,136 CZK, just 270 CZK less. This is a significant change compared to the Covid year of 2021, when the gap was much more meaningful.

Despite the shrinking wage gap, the median wage in the private sector is still significantly lower. For the first half of 2023, the disparity was 4,933 CZK. On the other hand, positions with higher education or managerial positions in the private sector earn substantially more, often more than 10,000 CZK on average, than those in the public sector.

The trend suggests that the private sector has significantly matured this year. If it continues, average wages may soon exceed average salaries, a situation last seen in 2014. However, these comparisons do not provide a comprehensive view of the situation as various factors, such as the level of education or the place of work, play a role. But the trend is clear – the private sector is catching up.