Living standards stagnate, experts say

Prague, March 11 (CTK) - Czech living standards have stagnated over the past two years and real wages increased in Q4 last year only because of managers' extraordinary bonuses, and ordinary people were not better off, analysts polled by CTK said commenting on data on average wages released earlier yesterday.

The firms had sought to pay the bonuses and remunerations ahead of this year's introduction of a solidarity surcharge on individual income tax and lifting of a cap on health insurance premiums.

Q4 average wage was 3.7 percent higher at Kc27,710. Full-year average wage stood at Kc25,101, up 2.7 percent, but at constant prices it fell by 0.6 percent, statisticians said.

"A wage hike seen for entrepreneurs is not reflecting their improving conditions," said Home Credit analyst Michal Kozub. "The reason is the tax change owing to which a number of them got their quarterly remunerations in December instead of in January," he added.

Their salaries steeply increased as a result. The first quarter will see the opposite development.

"The average wage is rising, while the median wage is falling which means the gap between the incomes in individual segments of society is widening," said Next Finance's Vladimir Pikora.

Wage hike in banking and insurance business was 24.1 percent in the fourth quarter. "This is not normal as banks are not doing so well," said Pikora.

In other words, last year saw almost one monthly pay more, he said, adding that this also applies to the area of electricity generation and distribution.

Patria Finance analyst David Marek said due to unemployment employees and trade unions do not have enough strength to press for pay rises and firms stay cautious given the unfavourable economic situation in the euro zone.

"Real wage is currently on the 2010 level as prices and wages grew almost at the same pace over the past two years," said Marek.

A noticeable improvement seems unlikely this year given the current economic situation, he added.

A survey by PwC PayWell showed that the biggest pay rises were seen for car importers and pharmaceutical and IT firms last year. Also banks' employees saw a pay rise of over 3 percent.

On the other hand, the lowest growth rate was reported for retail and transport.

"We rather expect stabilisation in the labour market and also wage stagnation this year," said PwC CR's Libor Stodola.

Wages of employees in key positions that contribute directly to the sales growth will continue rising this year, however. The firms realise they must keep such employees as it will be much more difficult and expensive to re-hire them once the economy starts to grow again, Stodola said.