Despite a nominal rise in wages in the Czech Republic, the surging inflation rate has resulted in a substantial decline in real income for employees. In the third quarter of this year, the average salary reached 42,658 koruna, indicating a year-on-year increase of 7.1 percent. However, when factoring in the eight percent inflation rate during the same period, the real wage experienced a notable decline of 0.8 percent. This means that, in practical terms, employees could purchase fewer goods or services with their average salary compared to a year ago, according to data from the Czech Statistical Office (ČSÚ). Notably, two-thirds of employees do not reach the average wage, underscoring the economic challenges faced by a significant portion of the workforce.

The median wage, representing the middle value of salaries, recorded a 7.1 percent increase to 37,492 koruna compared to the previous year. For men, the median wage reached 40,153 koruna, while for women, it stood at 34,705 koruna. The income distribution shows that 80 percent of employees received a wage within the range of 19,835 to 66,998 koruna.

An alarming trend highlighted by this data is the continuous decline in real wages for Czech citizens, with the last increase occurring two years ago in the third quarter of 2021. For eight consecutive quarters since then, real wages have been on a downward trajectory. Analyst Tomáš Volf from Citfin emphasizes that this situation significantly demotivates employees, contributing to a stagnant labor market.

The labor market stagnation is further exacerbated by employees’ hesitancy to change jobs due to uncertainties about future developments. As a result, companies face challenges in hiring new employees, compounding the issue of wage stagnation.

Data from Up Czech Republic, specializing in employee benefits, reveals that six out of ten employees perceive their compensation as undervalued. This unsatisfactory perception is closely tied to employers’ inadequate response to inflation, leading to a sustained reduction in employees’ purchasing power over nearly two years. The economic landscape underscores the need for comprehensive measures to address the impact of inflation on real wages and employee motivation.

Article by Prague Forum