Wages in CR grow mainly due to lack of workers --analysts;
adds reaction by reps of entrepreneurs in paras 3, 15-16

BUSINESS NEWS

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Prague Aug 30 (CTK)

Wage growth in the Czech Republic in the second quarter was pulled in particular by a shortage of workers in many segments caused by the fast economic growth, analysts polled by CTK agree.

The analysts are of the opinion that the economy is not yet in danger, but some do not rule out problems in the future.

Representatives of entrepreneurs said the development reflects the current state of the economy and of the productivity of companies.

Average monthly gross wage in the Czech Republic grew by 7.4 percent year-on-year to Kc21,462 in Q2. Real wage rose by 4.9 percent on average, the Czech Statistical Office said today.

Wages grew faster in the business sector where people were earning Kc21,687 a month on average in Q2. In the public sector, average wage stood at Kc20,673.

In the long term, the highest average nominal wages are paid in the financial institutions sector (Kc41,352 in Q2 2007).

"In simple terms, it can be said that Czech economy fares very well. Employees also benefit from this, but the average wage is still unattainable for over a half of them," CSOB analyst Petr Dufek noted.

Next Finance analyst Vladimir Pikora said that lower than average wage was earned by roughly two thirds of employees, and in some regions even three quarters of employees.

"Wage growth adjusted for inflation is the fastest in three years, but its pace is not yet faster than the economy can afford," HVB Bank analyst Pavel Sobisek commented.

David Marek of Patria Finance even thinks that the wage growth is still adequate or even cautious.

Raiffeisenbank economist Pavel Mertlik said that trends on the labour market remained the same.

"High demand for labour prevails. Domestic supply cannot fully satisfy it, so workforce is brought from abroad and wages are growing," he noted.

However, wages grow too fast with respect to labour productivity, Pikora said.

"Many companies will have problems with this growth pace in the future as it will slow down their expansion," he noted, adding that it will be a problem to pay employees and even to find them.

The wage growth is adequate to the labour productivity growth and inflation, Economic Chamber president Jaromir Drabek told CTK. Seven percent is a good figure and certainly it does not have a negative effect on economic development. It is absolutely correct that wages grew faster in the business sphere as in the past three years the pay rise was faster in the non-business sphere, said Drabek.

It is important for employers that wage growth is not faster than growth in the labour productivity and that it matches possibilities of companies, said Oldrich Koerner of the Confederation of Industry.

Despite the fast wage growth, it will take quite a long time for Czechs to earn wages comparable to western Europe.

"Even the most optimistic calculations signal that Czechs will earn the same money as Germans in 2037 at the earliest," he said.

Dufek pointed at the fact that average wage growth in the Czech Republic is the highest of the Visegrad Four countries in euros as well as in terms of the purchasing power.

"It is interesting that compared with Slovakia, Czech wages are 35 percent higher, which is undoubtedly the main reason why so many employees from Slovakia work in the Czech Republic," Dufek said.

Average wage in Slovakia made Kc15,112 a month in the first quarter, when using today's exchange rate for the calculation.

Sobisek expects nominal wage growth in the Czech Republic to stay below 8 percent also in the second half of this year.
 
"Wage pressures, caused by lack of people on the labour market, will be seen only in selected professions and will probably not influence the overall statistics too much. It remains to be seen, however, what will happen next year when wage bargaining will be affected by higher expected inflation," he noted.
 
Mertlik expects wages in the full of this year to grow by 6.7 percent.

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