“Salaries like in Germany”? PM’s economic aspirations met with disbelief
Ahead of next year’s general elections, Prime Minister Petr Fiala is seeking a mandate for a second term and another four years for himself and his government. However, his comment on Sunday 17th of November that his ‘pro-growth’ agenda will deliver “salaries like in Germany” has been met with criticism and anger. Danny Bate spoke to Lukáš Kovanda, chief economist at Trinity Bank, about the comments and the reaction.
We have these comments from Prime Minister Petr Fiala about increasing salaries in Czechia. Is this plan possible or feasible?
“I don't think so. It's not a realistic plan, because the current average salary in Germany is over 100,000 Czech crowns, and in Czechia it's just about 45,000 crowns. So in Germany, it is more than two times higher when compared to Czechia. So it's not realistic to expect that in just in four or five years this huge difference will somehow be erased.
“The difference has been there for many years. Already 35 years ago, economists and politicians claimed that we would be able to catch up with German and Austrian salaries in ten or fifteen years. Many Czechs still remember that this didn't happen, and we are still quite far from average German or Austrian salaries. So for many Czechs, claims like this from Petr Fiala are strange. I think almost nobody believes it's possible among the general public, and also amongst economists.”
And how would you describe the reaction to these policies in Czechia, not only from the general public but also from politicians? Does this present an opportunity for opposition parties like ANO?
“Yes, it’s a perfect opportunity for opposition parties to move ahead with their criticisms of the current government, because of these promises that are not feasible. They may portray this claim as a kind of fantasy, and say that politicians should not be speaking like that, and promising things that are not realistic or feasible.
“From a political point of view, it's a problem, maybe damaging for the government as a whole. Opposition parties, especially ANO, can now claim ‘look, these politicians are populist, they would do anything they can, and promise anything they can, just to stay in power for next four years’, or that they haven't really done anything to improve your social standing or the prosperity of the economy.
“Really, when you look at the Eurostat numbers, you can even see that there is a slight, but still growing discrepancy between salaries in Germany and Austria on the one hand, and salaries in Czechia on the other. This discrepancy has been growing in the last three years, since 2021, the year that Mr. Fiala’s government took power. This could really be used as an argument against the government and against Mr. Fiala. Now the leaders of the opposition parties will show that during the Fiala premiership, the situation has even worsened, compared with the situation before the year 2021.”
