Trade unions want wage growth to copy 2% inflation next year

Prague, Oct 3 (CTK) - The CMKOS umbrella trade union organisation expects inflation to reach between 2.0 and 2.5 percent next year, and the interval will be the lower limit for collective bargaining over wage growth, Josef Stredula, head of trade union Kovo, told journalists Wednesday.

The way individual companies will proceed in the talks will be individual, according to Stredula.

"Companies whose situation is not good will not be confronted with extreme wage growths, but we will at first check this in an economic analysis and than set our requirements," Stredula said.

"If companies are successful, there is no reason for us to be modest in our requirements on wage growth," he said.

Inflation forecast is burdened by great uncertainty. It will depend on how the lower house of the parliament will decide about value added (VAT) rates for next year, for example, according to Stredula.

"Data from our surveys do not confirm that companies would on average expect a wage growth of more than 2 percent," Confederation of Industry analyst Bohuslav Cizek told CTK.

Companies can afford a wage rise only if productivity and overall business results increase, which unions should take into account in their pressures on wage growth, Cizek said.

Reports from companies indicate that the following months and the beginning of the year 2012, when wage talks are held, will be difficult for the industrial sector, he added.

David Marek, an analyst at company Patria Finance, thinks that a moderate growth in real wages would not pose a problem to the economy, considering the expected moderate improvement in the economic situation and this year's austerity measures.

Overall, the average nominal wage could increase by 3 to 4 percent, according to Marek.

For next year, Patria reckons with average inflation of 2.2 percent. This estimate takes into account the expected hike in VAT rates to 15 and 21 percent.

If VAT rates are instead unified at 17.5 percent, as is embedded in legislation currently if force, Patria expects inflation to drop below 2 percent.

The government estimates that average inflation will be 2.2 percent in 2013, which is near the 2 percent inflation target of the Czech National Bank (CNB).