Post-communist Czechia: Living standards double, but not everyone feels the gain

A study by the Czech Economic Chamber (HK) has found that living standards in Czechia have doubled in the country since the 1989 Velvet Revolution. A separate survey, however, finds that a large proportion of the population does not recognize the improvement in the country’s quality of life.

According to the HK report, average wages in the Czech Republic are now 14 times higher than during communist rule, when monthly salaries stood at CZK 3,170, whereas prices have increased sevenfold on average.

The chamber's analysis notes that the key change was the price liberalization after the fall of communism when product shortages ended. Despite price rises since the late 1980s, purchasing power has grown. For example, people today can use 50 percent more kilowatt hours of energy for the same amount of money (relative to salaries) compared to 1989.

HK notes that mass economic reforms in the 1990s ushered in a free-market system and helped propel growth. Entrepreneurship boomed as a result, with registered businesses increasing from under 180,000 in 1990 to nearly 3 million entities today, 2 million of which are self-employed.

Czechia has also closed the gap with Germany’s GDP per capita by over 13 percentage points, though it still lags due to economic struggles seen in recent years. Commenting on the economic situation at present, HK says: “Czechia has exhausted all previous growth factors, lost its competitive advantages, and fallen into the so-called middle-income trap.”

Not everyone can see the benefits of post-communist rule, however. A separate survey conducted by the Czech polling agency STEM/MARK revealed that many Czechs do not feel an increase in living standards. Only 56 percent of people said that people have a better standard of living compared to the pre-1989 period, with 54 percent saying that job opportunities were better before 1989.

The survey also found that one in six Czechs thought life in general was better under communist rule. Those who held this view were more likely to be older, less educated, and have lower incomes. The survey also found that almost half of people believed living costs (relative to salaries) had sharply increased since 1989. Over two-fifths also feel food quality has declined since 1989.

Although living standards and purchasing power have jumped since communism, a significant part of Czechia’s population does not feel any positive effects due to the presently fragile economy.