Wage growth decelerates, unemployment drops

Wage growth decelerates, unemployment drops


At the end of 2010, the Czech government started to apply strict austerity measures to cut public spending. In terms of public sector wages, this caused a nearly six percent drop – with the inflation rate already weighed in in – in the last quarter of the year, new data of the Czech Statistical Office show.

Because of the cuts, the average wage in the last quarter of 2010 did not move in comparison with the previous quarter. In a year-to-year comparison, the average nominal wage grew by CZK 239 (less then 10 euro), on CZK 25,803 (EUR 1,032). This means a 0.9 percent growth rate, which is the smallest growth since 2000.

Nominally, public sector wages decreased in average by 3.9 percent, private sector wages grew by 2.1 percent in the fourth quarter of 2010. However, if adjusted to inflation, public sector wages decreased by 5.9 percent, and private sector wages stagnated. 

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Real wages in the Czech Republic thus decreased by 1.2 percent in the last quarter of 2010, because the inflation rate reached 2.1 percent in the fourth quarter.

Other economic data show that in February 2011, the inflation rate in the Czech Republic grew by 0.1 percent in comparison with the previous month. In the year-to-year comparison, the inflation rate grew by 1.8 percent in February.


Better employment prospects

Also, the unemployment rate in February 2011 surprised by decreasing 0.1 percentage point to 9.6 percent, according to the the Labor Ministry data.

It was widely expected that the unemployment would increase to 9.8 percent.

In addition, according to a survey conducted by Manpower, an employment agency, hiring plans of Czech companies for the second quarter of 2011 are the most promising since since the second quarter of 2008. Manpower surveys companies for their intentions to increase, decrease, or maintain the size of their workforce.

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Read more: Lost Generation: Young Czechs hit by unemployment

Read more: Czech construction sector to shrink 10% in 2011

Read more: Czech retail and housing suffers, manufacturing grows


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