3rd September 2020

Czech Republic: Wages fell in the second quarter

The slowdown in wages in the second quarter was driven mainly by wages in the private sector, which fell by 0.5% YoY, while wages in the public sphere slowed down only marginally from 4.9% in 1Q to 4.6% in 2Q 2020.

However, the fall in wages in the private sector was also driven by certain technical factors, as nursing allowances or quarantine wage compensation were not included in wages, although they increased household incomes.

As such, wages should return to single-digit growth in the second half of the year, reaching around 3% for the whole year. But there will be significant differences among sectors, as seen in the 2Q figures. For example, wages in accommodation and beverage service activities fell by 12% YoY.

Wages dynamics (% YoY)


Source: CZSO, ING


Due to average inflation of 3.1% in 2Q, the fall in real wages reached 2.5%, which is the strongest decline since the end of 2013. Still, 2Q wage figures were better than the central bank expected in its latest forecast (-0.6% YoY total), both in private (-1.5% YoY) and non-private (3.4% YoY) segments. 

All in all, rapid annual wage growth experienced in previous years of between 6-8% seems to be over due to the Covid outbreak, and wages should grow around 3% this year and next. However, due to elevated inflation, real wages will most likely stagnate.



Members of the American Chamber of Commerce in the Czech Republic