Economic growth spurs wage hikes

16-12-2014

Nearly 50 percent of Czech companies are planning to raise their employees’ wages next year, according to a survey conducted by the Czech Chamber of Commerce in around 500 firms all around the country. Only five percent of the companies that took part in the poll will be lowering their employee’s salaries next year.

Photo: Ladislav BábaPhoto: Ladislav Bába The companies are increasing wages mainly thanks to increasing profits and overall economic growth. The Czech Finance Ministry estimates this year’s GDP growth at around 2.4 percent. In the next two years, the ministry expects the economy to grow by 2.5 percent, mainly because of growing domestic consumption.

Salaries are expected to rise mainly in large companies. According to Vladimír Dlouhý, the head of the Czech Chamber of Commerce, 76 percent of the Czech Republic’s large companies are planning to increase their employee’s salaries next year, which is 20 percent more than in the previous year. But even some smaller companies, which were hardest-hit by the recession, are planning pay rises.

Wages are expected to grow mainly in the manufacturing and building industry, as well as in services. The results of the survey suggest they should grow by three percent on average. Wages of public sector employees will go up as well in 2015. The government has already approved a 3.5 percent increase in salaries, effective of November, to an average 25.878 crowns per month. The wages of public sector employees, such as teachers, will increase by an average 650 crowns a month. The government has also approved a five percent hike of salaries for health-workers, firemen and police officers. The pay hikes should cost the state an extra 7.5 billion crowns.

The survey of the Czech Chamber of Commerce also indicates that 43 percent of Czech companies are giving their employees an end-of-year bonus, which is usually lower than their regular monthly pay. Some 26 percent of firms are not giving out any end-of- year bonuses. According to the Czech Statistics Office, the average salary for the whole of the Czech Republic reached 25, 219 crowns (around 914 Euro) per month in the third quarter of this year, an increase by 1.8 percent year-on-year. Economic growth has also affected unemployment rate, which has been steadily decreasing since February, with the national jobless total of around 517 000 in November.

16-12-2014