While the average wage increased, it still continued to fall in real terms

The average nominal wage in the Czech Republic increased by 7.9 percent year-on-year in the fourth quarter of last year, reaching 43,412 CZK. However, when considering inflation, the average wage fell by 6.7 percent in real terms. This marked the fifth consecutive quarter of falling real wages, with the decline beginning in Q4 of 2021. In the third quarter of last year, average wages fell by 9.8 percent year-on-year.

Jitka Erhartová, head of the CSO’s labor statistics department, commented on the full-year figures, stating that “for the full year 2022, inflation was 15.1 percent and nominal wage growth was 6.5 percent. So in real terms, wages fell by 7.5 percent.”

The median wage for the last quarter of 2022 was 37,463 CZK, an increase of nine percent year-on-year. The median salary for men was higher at 40,232 CZK, while for women, it was lower at 34,554 CZK. The statisticians added that 80 percent of employees received wages between 18,666 CZK and 70,514 CZK.

Although wages increased in nominal terms every quarter of last year, they also fell in real terms every quarter. The first quarter saw a 7.3 percent increase in nominal wages, while the second and third quarters saw increases of 4.4 percent and 6.2 percent, respectively. However, in real terms, wages fell by 3.5 percent, 9.8 percent, and 9.7 percent, respectively.

The production and distribution of electricity, gas, heat, and air conditioning saw the most significant wage growth in last year’s quarter, up by almost 15 percent. However, wages in education fell by 0.3 percent, and the increase in health and social care was only 4.5 percent, according to the CSO.

For the whole of last year, the average wage was 40,353 CZK, a year-on-year increase of 6.5 percent or 2,450 CZK. However, consumer prices increased by 15.1 percent, resulting in an absolute wage decrease of 7.5 percent.

Economists expect real wage growth to recover in the second half of this year, more due to a fall in inflation than wage acceleration. Chief UniCredit Bank economist Pavel Sobíšek predicts that wage developments in the coming quarters will be similar to the last quarter of 2022, with visible real wage growth not returning until next year.

Similarly, Radomír Jáč, chief economist at Generali Investments, expects the decline in real wages to continue in the first half of this year but that the second half will recover year-on-year growth in average real wages due to a decline in inflation.