Former central bank governor says wage rises of around 5 percent realistic

The recently retired governor of the Czech national bank has pitched into the debate about the current level of wage deals in the Czech Republic, which divides employers and unions. On Czech television’s flagship discussion programme, Miroslav Singer said wage settlements of around 5 percent do not look out of place in the current economic conditions.

Miroslav Singer, photo: Filip Jandourek

Central bank governors and recently retired versions of the species do not usually side with trades unions on economic matters. On Sunday, however, Miroslav Singer appeared to do just that with comments that wage settlements of around 5 percent or more are not that unrealistic in the current Czech economic context. He pointed out that even higher demands had been made when conditions were much less promising.

“I would recall that we had in the past years when a five percent rise in wages was simply unrealistic. That illustrates in some ways how expectations now have been pushed down. We are now talking as if it was pretty daring to ask for 5 percent, but in 2007, if I am not mistaken, wages rose by 6 percent or more.”

Singer, who stepped down from his position at the end of June, added that in the current circumstances 2017 wage settlements in the private sector do not appear unrealistic. The wage demands were given the clearest expression last week in a massive meeting organized by the biggest Czech grouping of trade unions, the Czech and Moravian Confederation of Trades Unions under the overall banner “End Cheap Labour.”

Photo: Kristýna Maková

At the meeting, it was pointed out that most Czech workers are paid at levels well below the national average wage which now stands at just short of 28,000 crowns a month. In fact, around two-thirds of Czech workers are in this category with the national average wage pushed up by a much smaller proportion of high earners.

The meeting also highlighted fairly high regional inequalities in pay with around 7,000 crowns the normal difference now between traditionally high paid Prague wages and those in the lowest paid region, the Karlovy Vary region in the far west of the country. Many, people in that region now prefer to seek much higher paid jobs in neighbouring Germany rather than move somewhere else in the Czech Republic for work where the rewards would not be so great. Chairman of the union confederation, Josef Středula, said that wage rise of 5.5 percent were reasonable and that for some low paid workers the rise should be more like 10 percent because many foreign owned companies operating in the Czech Republic are simply taking advantage of the low wage environment while making handsome profits.

Josef Středula, photo: CTK

The Czech Chamber of Commerce, which represents many employers, says the unions are in many cases banging on an open door and that wages are already climbing fairly fast. Chamber president Vladimír Dlouhý highlighted the 3.9 percent average wage rise in the second quarter of the year.

Unions and employers are now at odds though over related areas such as the unions’ demand that workers are paid once more during the first three days of sickness. The unions are also demanding a more ambitious hike in the national minimum wage than both the government and the employers look likely to concede.