Real wages slump in Czechia for seventh consecutive quarter

In the second quarter of 2023, average real wages in Czechia fell by over 3 percent, despite nominal wage growth of 7.7 percent. This marks the seventh consecutive quarter of decline. High inflation, according to the Czech Statistical Office (ČSÚ), is to blame.

The average gross monthly wage in Czechia is CZK 43,000. Economists at the ČSÚ argue that the relative improvement in the rate of wage decline is due to the base effect from the previous year. Inflation remains the driving force behind this ongoing issue, with consumer prices surging by 11.1 percent in the second quarter. 

Breaking down the wage data, the median wage – representing the midpoint of all wages – rose by 7.8 percent year on year, to CZK 36,816. Men earned a median wage of CZK 39,847, while women earned CZK 33,862. 

In terms of industries, the financial and insurance sector boasted the highest average salary in the second quarter, exceeding CZK 76,500. Close behind were information and communication activities, with an average wage of around CZK 75,500. 

Conversely, the accommodation, catering, and hospitality sectors reported the lowest wages, averaging approximately CZK 25,500. Administrative and support activities offered wages of CZK 30,000, while the “other activities' sector” recorded an average salary of CZK 32,000.

Almost all industries experienced a decline in real wages. The only exception was the energy sector, which, similar to the first quarter, saw a nominal increase of 13.7 percent, translating to a real wage increase of 2.3 percent. 

In the manufacturing industry, the year-on-year decline in real wages was narrowly avoided, with motor vehicle and electrical equipment production showing nominal wage increases. The sectors with the weakest nominal increases were “other activities” at 2.9 percent, followed by cultural, entertainment, and recreational activities at 3.8 percent, and education, where wages nominally increased by 4.3 percent.

The future of Czech workers' real wages remains uncertain as they grapple with the consequences of surging inflation. It remains to be seen whether measures will be taken to alleviate this burden in the coming quarters. With inflation currently on a downward trend, people in Czechia will hope that the decline in real wages abates soon.