Real wages to rise in 2024 as Czech firms aim to attract more employees

Last year saw a lack of skilled candidates applying for jobs due to poor wages – however, trends in the labor market are set to shift in 2024.

Thomas Smith

Written by Thomas Smith Published on 10.01.2024 13:47:00 (updated on 10.01.2024) Reading time: 2 minutes

Companies are set to offer higher wages this year to tempt more workers amid a challenging 2023, which showed a persistent scarcity of skilled candidates across various sectors in Czechia, staffing agency Grafton Recruitment reports.

According to Grafton, increasing real wages (amid lower inflation) will help tempt more prospective employees to apply for, and join, firms. Higher pay is especially pertinent after last year’s consolidation package, which took away various staff benefits and some tax deductions (or exemptions).

Wages to grow after poor 2023 salaries

The worst period of real-wage decline is likely behind Czechia, according to the company. Last year saw “shortages of applicants, pressure on wage growth, and concerns about the consequences of the government's consolidation package,” Grafton observes. 

Grafton assumes that nominal wages will grow by around 8 to 12 percent this year. “It will be up to employers to make a profit [after higher wages], which will not be easy,” comments Grafton director Martin Malo. 

"Wages will grow the most particularly where there is the greatest shortage of applicants,” he adds. Malo also mentions that “the most critical situation” in the country’s labor market gap is the lack of qualified production experts and craftsmen.

AGENCY PROPERTIES

Apartment for rent, 1+KK - Studio, 25m<sup>2</sup>

Apartment for rent, 1+KK - Studio, 25m2

Varšavská, Praha 2 - Vinohrady

Apartment for rent, 2+kk - 1 bedroom, 50m<sup>2</sup>

Apartment for rent, 2+kk - 1 bedroom, 50m2

Lucemburská, Praha 3 - Vinohrady

Apartment for rent, 1+KK - Studio, 40m<sup>2</sup>

Apartment for rent, 1+KK - Studio, 40m2

U Pergamenky, Praha 7 - Holešovice

The current labor market

  • Nominal wage growth in 2023 grew by around 7.5 percent (year on year).
  • Real wages fell by around 3 percent last year
  • Nominal wages are expected to grow by between 8 and 12 percent
  • Unemployment in Czechia, as of December 2023, is just 3.7 percent.

    Sources: Czech Statistical Office, Grafton

Compensating for fewer work benefits

The increase in wages will also be tied to the fact that employees will have fewer work-related and tax benefits in 2024 following the government’s consolidation package. Grafton's survey forecasts a significant rise – of up to three-quarters – in benefit reductions due to the imposition of a limit on tax relief for employer-provided benefits. 

The anticipated cuts encompass various areas such as cultural contributions, sports facilities, transportation, and healthcare provisions.

KEY FINDINGS

  • Employees’ most popular benefits: Annual vacation of over five weeks (white-collar workers), and bonuses (blue-collar workers)
  • Applicants' most pressing problems: Low pay, a lengthy recruitment process, the need to commute
  • Companies’ biggest issues: A lack of applicants, high financial expectations of candidates, relocation of plants to cheaper locations (such as Asia)
  • Job position with the biggest salary increase: Python developer (up by CZK 50,000 year on year)

Malo also emphasized the looming trend of job hopping as employees prioritize higher compensations amidst potential benefit reductions. He stressed that employees might seek increased salaries, potentially leading to attrition if their demands aren't met.

Moreover, the 2024 amendment to the Labor Code poses a significant challenge for employers, stirring uncertainty regarding the correct implementation of new rules, particularly those related to home office agreements.

The report also reported that most job applicants contacted were interested in working as human resource specialists or assistants. According to Grafton, companies’ most sought-after positions included accountants, controllers, and electromechanics. The best-paid vacancy was the director of a production plant. 

As 2024 unfolds, companies are urged to prioritize flexibility and increase wages to best attract workers.

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