New hires flex bargaining muscles to force up wages

The scramble for workers is forcing many Czech companies to hike up the wages and starting packages for new arrivals. But loyal workers might feel they are losing out.

Photo: Ladislav Bába / Czech Radio

The days when news workers were expected to learn the ropes and patiently work their way up the ladder and see their earnings rise accordingly are over. That’s the broad analysis of a survey carried out by the consultancy Hay Group.

It found out that such is the scramble by some Czech employers to hire new workers that some are offering starting wages of 99 percent the level of those who have already been there for some time. The survey was based on questions put to 500 companies and details of 5,000 wages currently being paid out.

Photo: Stoonn, FreeDigitalPhotos.net

Many of the new hires are more experienced but in some cases are demanding around twice the earnings of senior staff and lack some key qualifications, according to the manager of a Czech firm specialising in international presentations quoted by the business daily Hospodářské Noviny.

The same picture stems from a survey of the earnings expectations of newly qualified graduates garnered by the Universum agency. They expected to get around 25,500 crowns gross as a starting wage. That’s just around 1,000 crowns short of the average wage across the whole of the Czech Republic.

And many companies are also resorting to side benefits to boost the attractiveness of their offer to new hires. Around nine out of 10 companies say they are offering extra holidays or company cars. Around three quarters offer help with housing costs. Half offer paid sick days and around a fifth contribute to the costs of travelling to work.

Photo: Klára Stejskalová, Czech Radio

In spite of the Czech reputation for equality and social justice, the Hay Group survey highlights a much larger gap between the earnings of top managers and ordinary workers in the Czech Republic than in Germany. In Germany top managers are usually paid around twice as much as workers. In the Czech Republic, top managers are often getting four times as much.

It’s survey highlighted the car production and engineering sectors as two of the main areas where the competition to hire new workers is at its fiercest and where wages are as a result rising the fastest.

Czech National Bank, photo: Google Street View

Overall though, in spite of what the survey suggests, the Czech National Bank has in recent months been rather disappointed by the rate of wages growth in the Czech economy and the fact that it has not given a bigger impetus to still weak inflation figures which are not expected to even start approaching the bank’s target of 2.0 percent year on year annual inflation until towards the end of 2017. That seems to suggest that many of those in jobs for some time, rather than the new arrivals, are not flexing their bargaining muscles