Average real wages fell by 2% due to inflation

Compared to the fourth quarter of 2020, wages increased last year by 1,551 kroner.

“However, consumer prices increased by 6.1 percent during this period, and thus wages decreased in real terms by 2 percent. The amount of wages increased by 4.8 percent, and the number of employees increased by 0.8 percent.”

According to the chief economist at UniCredit Bank, Pavel Sobiesek, the decline in real wages is just the beginning.

“The unhappy financial situation of many companies, as well as the state’s need to cut spending, will face a huge jump in inflation. Wages will respond to it with a noticeable delay. Until the third quarter of 2022, we will almost certainly have to come to terms with the annual decline in real wages, Until the end of this year it may not bring any change in this regard,” said Subishek.

For the whole of last year, wages rose by 6.1% to 37,839 kronor, while in real terms they rose by 2.2%.

The median, the average wage value, rose 4.9 percent year-on-year to CZK 34,360 in the fourth quarter. Eighty per cent of employees earn between 17,221 and 65,753 kronor per month.

In the fourth quarter, wages grew most in real estate activities by 14.2 percent. Then employees in accommodation, food and hospitality got 9.7 percent more. By contrast, wages in health and social care fell by 8.1 percent.

According to the chief economist of the Czech Banking Association, Jacob Seidler, year-on-year wage growth is very volatile. This is due to the effects of the coronavirus pandemic, such as quarantines or unusual rewards.

“For example, the 8% drop in wages at the end of last year in health and social care was driven by a higher base effect at the end of 2020, when extraordinary bonuses were paid to combat COVID-19,” Seidler said.