Economists expect sharp second quarter rise in Czech salaries

Salaries in the Czech Republic probably increased by between 7.5 percent and 13 percent in the second quarter of this year, according to economists interviewed by the Czech News Agency. In a piece on Monday, the wire service said that once inflation is accounted for wages likely jumped by 4.5 percent to 10 percent in that period.

Analysts point out that this significant increase is due to a low base effect, as well as the payment of special bonuses to people in the healthcare sector.

In the next few quarters, wage rises should return to 3 or 4 percent, the experts say.

The Czech Statistics Office is set to release data on average salaries in the second quarter this coming Friday. Typically two-thirds of employees take home less than the average wage.

In the first quarter of 2021 the national average salary rose by 3.2 percent year-on-year to CZK 35,285 a month. After including growth in consumer prices, earnings rose by 1 percent in real terms.

Pavel Sobíšek, the chief economist of UniCredit Bank, said that special bonuses paid out to staff in the healthcare field in the second quarter hugely inflated the average wage in the entire economy.

Mr. Sobíšek said his organisation expected nominal wage growth of 11 percent year-on-year, which was a rate not seen in 25 years. He said the third quarter of 2021 should see pay packets increase by 3 to 4 percent once again.

Miroslav Novák, an analyst with Akcenta, said double-digit year-on-year growth looked impressive at first glance.

However, this figure is majorly skewed by economic developments in the second quarter of last year; it was greatly impacted by the Covid crisis, with a sharp drop in hours worked and a knock-on fall in average nominal wages, he said.

ČSOB bank analyst Petr Dufek said that it was almost a lottery to estimate development in a quarter when a major portion of services were in lockdown and the first signs of downturn in industry were felt.

Mr. Dufek said the latest wage growth figures looked impressive due to the low base effect, adding that he expected salary growth for the entire economy to reach 7.5 percent year-on-year.

Miroslav Novák of Akcenta told the Czech News Agency that the shortage of workers on the labour market would start pushing salaries up in the coming quarters.

In addition, Mr. Novák said, there will probably be a significant increase in the minimum wage from the beginning of next year, which will be reflected in pressure on wage growth below the median.

In the second half of 2021 and early next year real wage growth could have a negative effect on consumer inflation, which in some months will climb by over 4 percent, the analyst said.