Recent data from the “Information System for Average Earnings” (ISPV) indicates a notable shift in the wage landscape of the Czech Republic, with the private sector closing the wage gap with the public sector. The average earnings during the first half of 2023 reveal that the private sector has caught up with its public counterpart, marking a significant departure from the gap observed in 2021.

Pavel Peterka, Chief Economist of Roklen, attributes this convergence to the consolidation of the state budget and increased pressure on private companies concerning wage growth. The effort to stabilize public finances led to a scenario where public sector salaries did not escalate at the same pace as those in the private sector.

According to ISPV data, in the first half of 2023, the average earnings in the public sector amounted to 45,406 CZK, while in the private sector, the average salaries were slightly lower at 45,136 CZK, a difference of just 270 CZK. This contrasts sharply with the scenario in 2021, during the challenges of the Covid-19 pandemic, when the wage gap was more pronounced.

However, despite the closing gap, the median wage in the private sector remains notably lower, with a disparity of 4,933 CZK in the first half of 2023. Higher education or managerial positions in the private sector, on the other hand, command significantly higher average earnings, often exceeding those in the public sector by over 10,000 CZK.

This trend signifies a substantial maturation in the private sector throughout the year. If this trajectory persists, average wages in the private sector might soon surpass those in the public sector, a situation last observed in 2014. While these comparisons offer insights, it’s crucial to note that factors such as education levels and workplace locations play integral roles in the wage dynamics. Nevertheless, the overarching trend indicates a noteworthy catch-up by the private sector in the Czech Republic.

Article by Prague Forum