The Decline and Potential Recovery of Wages in the Czech Republic

The Czech Republic is experiencing an economic downturn, with people’s wages falling. As per the data released by the Czech Statistical Office (CSÚ), the average salary in the last quarter of the previous year was 46,013 crowns, an increase of 6.3 percent year on year. However, the rise in inflation surpassed the growth of nominal wages, leading to a decline in real wages for the ninth consecutive quarter, this time by 1.2 percent.

Jitka Erhartová, head of the Labor Statistics Department of CSÚ, confirmed this pattern, stating that, despite the nominal wage’s over six percent growth, the real salary declined by 1.2 percent in the fourth quarter of 2023 because of inflation’s impact. This drop marks the ninth consecutive decline.

The median wage in the last quarter of the previous year was 39,685 crowns, a six percent increase yearly. As per the statistics, eight percent of employees earned wages between 20,073 and 74,654 crowns. The highest annual wage increase was recorded in the mining and extraction, accommodation, catering and hospitality, and water supply sectors, as well as activities related to wastewater, waste, and remediation, where wages increased by approximately one-tenth.

The average wage for the entire previous year was 43,341 crowns, a year-on-year increase of 7.5 percent. However, in reality, a wage decline occurred. “The real wage decreased by 2.9 percent in 2023, as inflation reached 10.7 percent,” Erhartová explained. Real wages have fallen for the second year, with an 8.5 percent decline in 2022.

Despite the gloomy picture, there are signs of an upturn. Tomáš Volf, an analyst at Citfin, expects real wages to rise in the coming months. This improvement is anticipated due to low inflation, which the growth of nominal wages will overtake. Furthermore, this year could be marked by a better economic situation than in the previous two years. The leading economist of UniCredit Bank, Pavel Sobíšek, predicts a potential 3.5 percent increase in real wages this year, the best result since 2019.