Analysis of the development of average wages of employees - 1st quarter of 2011

The registered number of employees FTE overall increased by 0.1%, i.e. by four and a half thousand, in Q1 2011, compared to the corresponding period of the previous year.

Concerning respective activities the development in the registered number of employees was, however, found rather differentiated, although there is no dramatic change in terms of numbers in majority of cases. A drop in the number of employees was recorded in ‘construction’ (-6.6%, i.e. by 16 thousand). Employment also decreased in ‘accommodation and food service activities’ (-5.0%, i.e. by 5.7 thousand), ‘transportation and storage’ (-3.1%, i.e. by 7.8 thousand), ‘mining and quarrying’
(-2.7% i.e. by a thousand), and in other activities, of which the most important decrease in the number of employees occurred in ‘public administration and defence; compulsory social security’ by 10.7 thousand, which represent 3.7%.

An important increase in employment can be, by contrast, found in ‘administrative and support service activities’ (+4.9%) or in ‘other service activities’ (+3.2%) and, furthermore, in ‘real estate activities’ (+2.7%) and in ‘human health and social work activities’ (+1.6%). What is more than promising is the revived hiring in ‘manufacturing’, which suffered the most by depression in recent years – a growth by 3.2% here means the increase in the number of employees by 33.1 thousand.

The business and non-business spheres followed very different development paths. While in the business sphere there was a tiny overall, a half per cent growth in employment, in the non-business sphere employment substantially dropped by over 11 thousand, that means -1.6% of the original number. Yet till Q3 2010 the number of employees in the non-business sphere was slightly increasing. Recovery in the business sphere is therefore demonstrated not merely in the renewed increase in employment but also in the year-on-year growth in the overtime work share.

Concerning the average wage itself (as the arithmetic average calculated as the ratio of wage volume and employees FTE) the nominal increase recorded was just slightly higher than the average of the last year yet it is driven exclusively by the business sphere. On the contrary, in the non-business sphere the drop in the average wage (salary), which begun in the middle of the last year, has continued. The average wage increase was 2.1%, nominally, compared to the corresponding period of the previous year. It is necessary to mention, that in first quarters the index is usually affected, in certain activities, by payments of extraordinary bonuses and premiums for economic results of the previous year in a strong manner. For this reason, the significantly variable basis of this index has to be taken into account.

The factor affecting the real wage trend is the increasing price level (inflation) expressed as the consumer price index, which in Q1 2011 climbed to 101.7%. Thus the overall average real wage in Q1 2011 rose by 0.4%, y-o-y.

As it has been already said the business sphere recorded a higher year-on-year nominal growth (3.0%), which was also demonstrated in the real wage index (1.3%), while in the non-business sphere the average real wage fell by 3.3% and this means it has dropped in fourth quarter in a row. If there was formerly a rule that there is a higher arithmetic average of wages in the non-business sphere, due to higher number of employees having higher educational attainment, compared to the business sphere, the latest development has already denied this fact – the average wage in the non-business sphere was by CZK 658 lower than the average wage in the business one.

The development is also strongly differentiated concerning activities of the economy. The average wage nominally significantly dropped in ‘public administration and defence; compulsory social security’ (-4.2%), then it decreased in ‘professional, scientific and technical activities’ (-1.5%), and in ‘arts, entertainment and recreation’ (-0.1%). The nominal wage stagnated in ‘human health and social work activities’ (a decrease by CZK 10) and has already somewhat recovered in ‘education’ (+1.1%) but its growth has been still falling behind the pace of consumer prices (+1.7%).

A rather significant positive growth of wages (over five per cent) occurred in two activities only as follows: ‘electricity, gas, steam and air conditioning supply’ (+8.5%) and ‘other service activities’ (+6.2%). The growth of wages in ‘manufacturing’ (+3.8%) confirms that this engine of the Czech economy has already been recovering from depression. In the rest of groups of activities the growth of nominal wage fell within the range of +1.9 and +4.6 per cent, that is higher than the inflation rate.

Concerning the average wage level itself the first trio has not changed: the gold medal is still in possession of the ‘financial and insurance activities’ (CZK 53 043), ‘information and communication’ has the silver one (CZK 44 514), and the ‘electricity, gas, steam and air conditioning supply’ follows with the bronze medal by a narrow margin (CZK 43 525).

On the contrary, activities of the lowest wages are ‘accommodation and food service activities’ (CZK 12 379, yet in these activities tips also make a part of income), ‘administrative and support service activities’ (CZK 16 122), and ‘agriculture, forestry and fishing’ (CZK 16 504).

The estimate of wage resources (wages without other personnel costs) has shown a year-on-year increase by 2.2%, i.e. by CZK 5.6 billion. Wage resources in the business sphere rose by 3.5%, i.e. by CZK 7.2 billion; on the contrary, in the non-business one they fell by 3.3%, i.e. by CZK 1.6 billion.

The minimum wage has showed no change since January 2007 and accounts for CZK 8 000.

Graph No. 1
Graph No. 2

Published: 08.06.2011
The data are valid as of the release date of the publication.