Wages in Czechia grow faster than in the EU

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Wages in the Czech Republic have consistenly been growing faster than in the European Union over the years, with Czech wages at 43 percent of the overall EU wage average in 2019, while in 2014, Czech wages were only 35 percent of the EU average..

Dalibor Holý, the director of the labor market statistics department of the Czech Statistical Office of Labor, confirmed this at a press conference on Thursday last week.

Poland and Lithuania are in a similar position, while Hungary and Slovakia are slightly less so (41 percent). At the level of 37 percent of the EU average was Croatia and Latvia, while Romania jumped quickly to 36 percent.

Bulgaria remained in last place of the ranked EU countries, with 21 percent of the EU average. In this Balkan country, salaries are half that of the Czech Republic.

By contrast, the highest hourly wages are in Denmark, where they are at 176 percent of the EU average followed by Ireland (155 percent), Luxembourg (148 percent), and Sweden (136 percent).

The largest EU countries are the economies of Germany, where wages are at 118 percent of the EU average, France (110 percent), Italy (94 percent), and Spain (73 percent).

Wage developments have varied considerably across the member states, especially in recent years. Wages increased the fastest in countries where they rose from a low starting point.

“It is basically the rule that nominal wage increases are higher in poorer countries, and therefore, levels are generally converging. Romania is on the top here, where the hourly wage increased from €2.79 in 2014 to last year’s €6.23, which means an increase by 123 percent,” Dalibor Holý pointed out.

Wage growth was not closely linked to price growth in the countries concerned, so the purchasing power in the countries with lower wage levels grew faster.

However, in several countries, wages actually fell in real terms between 2010 and 2019 in instances where prices rose faster than hourly wages for employees. These are the cases of Belgium (-1 percent), Spain, the United Kingdom, and Italy (both -2 percent), Cyprus (-6 percent) and Portugal (-9 percent).

A special case is Greece, where wages have not only fallen in real terms. A large nominal drop in earnings occurred there in the first half of the 90s when wages fell by a quarter. Since 2016, they have been growing, but only slowly.

When comparing domestic wages with the EU average, Czech wages grew more slowly in only one branch, which was in the mining. Between 2010 and 2019, hourly wages in this area increased by 14 percent in the EU, but only by 10 percent in the Czech Republic.

“Czech education has moved up the most, where salaries have risen by 37 percent in real terms in nine years, while wages in the EU as a whole have risen by less than 2 percent, — only slightly above the level of price growth. Significantly faster growth rates compared to the EU average were also recorded in culture, health care, and in accommodation, catering, and hospitality,” concluded Holý.

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