- Hans Weber
- December 4, 2023
Czech Salaries Show Encouraging Trends Despite High Inflation Rates
A recent survey conducted by the personnel agency Grafton Recruitment has unveiled positive developments in Czech salaries, signaling a halt to the decline in real wages despite high inflation rates. Nominal wage growth has reached approximately six to eight percent across various industries, aligning with the current annual inflation rate of 8.5 percent recorded in August. However, the IT sector has encountered a wage ceiling, hindering further salary increases.
While inflation has surpassed the nominal wage growth reported by the agency, the decline in real wages, representing purchasing power, has ceased. Economists, including Pavel Sobíšek, Chief Economist at UniCredit Bank, and Radomír Jáč, Chief Economist at Generali Investments CEE, anticipate stabilization in the second half of the year, with expectations of stagnant or slightly increased real wages on a year-on-year basis.
The survey also highlights the impact of employee shortages, particularly in sectors experiencing fierce competition for talent. Companies at risk of losing contracts due to worker shortages are likely to see wage increases. However, the IT industry is nearing a virtual wage ceiling, making further salary growth unlikely. Younger employees may face challenges in negotiating higher wages.
While some industries have delayed new hires until later in the year, the demand for candidates remains high, both for skilled and unskilled positions. The complex and lengthy cross-border recruitment process from countries outside the European Union, combined with unsatisfactory rules regarding economic migration, contributes to this situation.
The future development of wages will continue to be influenced by ongoing economic crises, negligible economic growth, and specific components of austerity measures. Limitations on tax advantages for employee benefits will play a significant role from an employee cost perspective. Many employers may reduce the level of provided benefits, leading to increased pressure for wage hikes, employee dissatisfaction, and higher turnover.
From an employee perspective, this could result in a decrease in their standard of living, potentially impacting their work commitment, performance, and overall well-being.
The survey, conducted in the third quarter of this year, examined the financial remuneration of hundreds of job positions across nine industries and thirteen regions. Data was primarily derived from candidate entry salaries, providing valuable insights into the evolving salary landscape in the Czech Republic.
Article by Prague Forum