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Will Czech salaries catch up to Western Europe?

Wages in the Czech Republic are on a steep rise, but will they ever match the country’s Western neighbors? And should they?
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It’s no secret: with the current job market in the Czech Republic – a record low rate of unemployment, and a record number of jobs on the market – Czech salaries have seen a welcome rise in recent years.

Still, they are well below many other EU countries, in particular neighbors like Germany and Austria, which have average salaries nearly three times higher than those of the Czech Republic.

Rising wages in the Czech Republic have been a hot topic in recent months. Czech officials recently approved a hike in minimum wage for 2019, and government employees are also set to get a hike in salaries next year. Trade unions are pushing for across-the-board raises by 8-10%.

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The average salary in the Czech Republic is now nearly 32,000 CZK per month. But according to experts, it could be much higher.

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“If the world economy and the Czech economy were not hit by the economic crisis in 2008 and 2009, we estimate [the average Czech salary] would be about 40,000 crowns per month,” says Jiří Polanský, economic analyst for Česká spořitelna, in a Metro report.

A big part of the economic growth in the Czech Republic over recent years has been a high level of investment from both domestic and foreign firms. But as salaries in the country rise, will corporations look to move their businesses abroad?

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“Our economy is very interesting for domestic and foreign investors because of relatively low wages compared to a highly skilled and educated workforce,” Polanský says. He doesn’t anticipate an exodus of investment.

“Companies are willing to accept the very high growth of their employees’ wages.”

But not everyone agrees. There’s been some debate about whether rising salaries in Prague and beyond will lead to a turnaround on the Czech market.

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“It could happen that when companies start to say they have to pay too much for wages, they stop investing,” says Vladimír Dlouhý, President of the Czech Chamber of Commerce.

“And if our country needs something more than salary growth, it’s investment.”

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