Analysis of the development of average wages of employees - 3rd quarter of 2011

The period of a very slow yet stable growth of the average wage has continued in the Czech Republic. In the recent eight quarters of year the nominal growth quarter-on-quarter and seasonally adjusted oscillated in between 0.1% and 0.9%, while in the last two quarters it was identically 0.5%. In the year-on-year comparison the 2011 wage growths were above 2.0% and in Q3 2011 the growth reached 2.4%.

The next important factor affecting the development in wages was the price level (inflation), which influences the development in real wages. In Q3 2011 the consumer price index attained 101.8%. Thus in Q3 2011 the total average real wage increased by 0.6% year-on-year.

It is necessary to realise, when investigating the labour market, that the development was strongly differentiated concerning respective economic activities. In some of them the average wages grew significantly, in others they even declined in nominal value. A drop can be found, as it is already tradition, in ‘public administration and defence; compulsory social security’ (-0.3%), furthermore in ‘arts, entertainment and recreation (-0.2%) and ‘professional, scientific and technical activities’ also experienced a substantial decrease in wages (-3.1%). On the contrary, activities of ‘water supply; sewerage, waste management and remediation activities’ (+4.5%), ‘real estate activities’ (+5.1%), and ‘other services activities’ (+6.1%) were doing well.

In the second profile surveyed the development in wages was different as well. The business sphere recorded a higher increase in the average wage (+2.7%) than the non-business one (+1.1%), in which the nominal growth has not compensated inflation and therefore a further decline of the real wage by 0.7% occurred. It is necessary to keep in mind that pay in the non-business sphere has been decreasing in real terms year-on-year already since Q2 2010. Thus in Q3 2011 the average salary in the non-business sphere was by CZK 126 lower than the average wage in the business sphere.

The trend in average wages has been affected jointly by two factors as follows: development in the number of employees and development in the amount of wages. The amount of wages in total increased by 2.0% in Q3 2011 and that is a positive trend. Unfortunately, the second factor was not so positive. The registered number of employees FTE overall decreased by 0.3%, i.e. by almost thirteen thousand persons, in Q3 2011, compared to the corresponding period of the previous year.

The trend in the number of employees was also greatly differentiated in various activities. Deep drops were recorded in ‘construction’ (-6.4%, i.e. by approx. 16 thousand) and in ‘public administration and defence; compulsory social security’ (-5.6%, i.e. by almost 17 thousand); employment also decreased in ‘accommodation and food service activities’ (-3.5%, i.e. by 3.9 thousand) and relatively expressed by less yet in the absolute number in a more important way in ‘transportation and storage’ (-2.8%, i.e. by 7.1 thousand). A positive message was the recruiting of employees in ‘manufacturing’ where the increase by 2.7% means the number of employees grew by 27.8 thousand.

When classified by sectors of national accounting the development was also very differentiated as follows: while the business sphere recorded a minute increase in the number of employees year-on-year by 0.1%, i.e. by 3.9 thousand, in the non-business sphere the number of employees dropped by 16.7 thousand, i.e. by 2.4%.
The cumulated data for Q1 to Q3 2011 indicate overall stagnation in the number of employees and the average wage growth by 2.2% nominally and by 0.4% in real terms. What is characteristic is the discrepancy in between the two spheres as follows: in the business sphere the number of employees increased by 0.5% and the average wage grew by 2.9%; in the non-business sphere, conversely, the number of employees fell by 2.2.% and the average salary declined by 0.5%. The still lasting favourable trend in the business sphere was therefore demonstrated both by an increase in employment and by a year-on-year growth in wages and a decrease in the overtime work portion seems to be the only minute flaw thereof. In the non-business sphere, by contrast, both the main factors were showing adverse values.
The minimum wage has showed no change since January 2007 and accounts for CZK 8 000.

Graph No. 1


Graph No. 2

Published: 05.12.2011
The data are valid as of the release date of the publication.