Wednesday, 23 April 2014

Unions seek minimum wage growth of 2.5% in 2013

18 January 2013

Prague, Jan 17 (CTK) - Czech trade unions are looking to ensure at negotiations with employers a wage growth of at least 2.5 percent this year, which is their inflation estimate, Josef Stredula, head of the KOVO metalworkers' union, said at a press conference of the CMKOS trade union organisation.

The unions primarily look to maintain the employment levels, however, he added.

At the current stage of the collective bargaining process, it can be said that unions have secured a pay rise of 2.5 percent or even higher in one-quarter of firms, which is very good, Stredula said.

Firms that have agreed wage hikes are, for instance, Honeywell, Mora, Trinecke zelezarny and Bosch Diesel.

"In firms whose situation is not good we prefer maintaining jobs (to pay rise)," Stredula said.

Analysts told CTK in a poll that average inflation will drop to 2.5 percent this year but people's incomes will be lower because wages are estimated to grow at a minimal pace.

Last year's inflation rate reached an average 3.3 percent.

Based on the old method the Labour Ministry used to calculate unemployment, the jobless rate can surpass the 10 percent level this year, according to estimates.

Czech average wage grew by Kc348 on the year to Kc24,514 in Q3 last year. The increase of 1.4 percent was, however, the second smallest since 2000. Real wage decreased by 1.8 percent.

The unions yesterday criticised the state budget results for last year due to lower revenues than planned by the Finance Ministry.

CMKOS expert Martin Fassmann said the lower VAT collection is the main problem as there is a lack of money for the pension reform.

The Finance Ministry resolutely rejected the unions' statement describing it as manipulation with facts.

The increase of the reduced VAT rate from 10 to 14 percent as of January 2012 was to bring an additional Kc23bn to the state coffers, the unions said. VAT collection was, however, Kc22bn lower than planned.

The VAT hike caused a growth in inflation to 3.3 percent and a fall of real wages last year, said the unions.

The VAT change contributed around 1 percentage point to the 2012 inflation rate, according to the ministry. The unions ignore the other factors affecting the inflation rate, said Finance Ministry spokesman Ondrej Jakob.

"The crisis in which we are now is the consequence of the restrictive policy of this government," said Fassmann.

The 2012 state budget ran a deficit of Kc101bn. The approved budget reckoned with a Kc105bn gap. Revenues were Kc42.6bn lower than the optimistic budget draft. VAT revenues posted an annual rise of 4.1 percent to Kc199.7bn, but the ministry had expected a 15.5 percent increase.

"Higher VAT revenues are used to finance the pension system and transformation costs of the pension reform," Jakob said.

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