Czech wages growing, but still lag far behind Germany or Austria

Czech wages have been the fastest growing in the region over the past 10 years, but the overall wage level is still far below that of Germany, where wage growth was the slowest.

Over the last decade, wages in the Czech Republic have risen by 51 percent, growing almost twice as fast as in Germany or Slovakia. The newly released analysis by brokerage company Purple Trading looked at wages in the Czech Republic and the surrounding countries.

In Germany, the growth over the past 10 years was as 26.5 percent, or roughly half the rate of the Czech increase. This was followed by Slovakia with growth of 27.1 percent. The pace of increase slowed significantly there in 2008 with the introduction of the euro. Poland saw an increase of 34 percent, while in Austria wages rose by 36.9 percent since 2010.

The Czech average gross monthly nominal wage is CZK 34,271, according figures for the second quarter of 2020 from the Czech Statistical office (ČSÚ). This figure can be a bit deceptive, as the statistical office points out that about two-thirds of employees have a wage below the national average.

In Germany, the gross monthly wage for the same time period is the equivalent of CZK 106,436 according to Purple Trading. Austria had the second highest average wage at the equivalent of CZK 100,321.

Poland and Slovakia were both lower than the Czech Republic. The Polish monthly wage reached CZK 29,591 crowns and in Slovakia it was as CZK 27,025.

Germany, Austria and Slovakia are members of the eurozone, while the Czech Republic and Poland use their own national currencies.

Purple Trading’s analysis showed that strong wage growth was accompanied by inflation. the Czech Republic has the highest level in Central Europe, currently 2.9 percent. In Germany, which is Europe’s largest economy, price growth is very slow and in the midst of the pandemic has even been facing a deflation of 0.2 percent.

“Inflation can indicate where wages will go. We’ve done very well over the last few years, but productivity has sometimes not copied the massive wage growth. As a result of restrictive measures, wage growth can be expected to stagnate next year, not only in the Czech Republic but also in other European economies,” Purple Trading analyst Štěpán Hájek said in a press release.

Another recent analysis by consultancy Deloitte, released in September, ranked countries for quality of life. It took into account purchasing power parity (PPP) as one of its factors. PPP looks at not only average wages but also prices for common goods and costs for rent or housing. This gives a more complex picture of the economy. The Czech Republic came in 25th place for quality of life out of 163 ranked countries, while Germany was at number 11 and Austria was at 15. Poland and Slovakia ranked worse the Czech Republic, at 31st and 36th place respectively.