Analysis of the development of average wages of employees - 3. quarter of 2007

 
In Q3 2007 the nominal average gross monthly wage ² per actual person reached CZK 21,470 and in the  year-on-year comparison the increase was CZK 1,517.

In the business sphere the average wage increased, y-o-y, by CZK 1,528 to CZK 21,612, in the non-business sphere by CZK 1,466 to CZK 20,952. The wage growth was relatively balanced; in total, the average wage increased by 7.6%, while in the business sphere the increase was identical, i.e. 7.6%, in the non-business sphere it was 7.5%. The relative y-o-y increase of the average nominal wage in Q3 (7.6 %) compared to Q1 showed the slow-down of the growth by 0.3 percentage point yet it belongs to the highest in the last 5 years.

The development of real wage is in addition to the nominal wage growth affected also by the growth of price level (inflation) expressed by the consumer price index. Consumer prices increase in Q3 by 2.5% represented a growth of real wage by 5.0%, in the business sphere also by 5.0% and in the non-business sphere by 4.9%. For the development of nominal wage, real wage and consumer price index see Graph 1, more detailed information on /produkty/pmz_cr.
 
Graph 1 
Minimum wage increased as of 1 January 2007 up to CZK 8,000, in the first half of 2006 it accounted for CZK 7,570 Kč and in the second half-year for CZK 7,955.

The increase of the volume of wages of sets of reporting units not including enterprises with less than 20 employees, compared to the same period of the previous year, accounted for almost CZK 17.5 billion which is more than 8.9 % at a 1.2% current growth of the number of employees.

Nationwide wage development is heavily shaped mainly by the business sphere since their employees make more than three quarters of the set of units measured. While the wage development in the business sphere is more fluent and is affected mainly by economic results of the companies, it is jump-like in nature in the non-business sphere because it depends to a large extent on legislative measures of the government and on what the budget allows. Since 2005, the payment of so-called other salaries was cancelled in the non-business sphere. Thereby, marked differences in the wage level between individual quarters were suppressed and the wage development started to be smoother. This fact is most clearly documented by year-on-year relative increases recorded since Q1 2006 which is the first from this point of view comparable period in this sphere. The nominal wage development and relative increments by spheres are shown in Graph 2.
 
Graph 2
In Q1-Q3 2007 the nominal average gross monthly wage reached CZK 21,119 which was by CZK 1,499 more, year-on-year. In the business sphere the average wage increased year-on-year by CZK 1,561 to CZK 21,322, in the non-business sphere by CZK 1,267 to CZK 20,397. The relative increase of the average wage was 7.6 % in total, the growth in the business sphere being 7.9% and in the non-business sphere 6.6 %.

Consumer prices increased in the reported period by 2.2%, real wage thereby increased by 5.3 % in total, in the business and non-business sphere by 5.6 % and 4.3 %, respectively.Given the fact, that the non-business sphere employs a higher proportion of part-time workers than the business one, the following comparisons are made with the average wage data related to f ull-time equivalent (FTE) employees as these data take account of the length of work.

In Q3 2007, the average nominal gross monthly wage per FTE persons increased, y-o-y, by CZK 1,572 (+7.6 %) and reached CZK 22,130; in the business sphere the increase was CZK 1,580 (+7.7%) rising to CZK 22,140 and in the non-business sphere to CZK 22,095 (+7.5%, CZK 1,542). Real wage increased y-o-y by 5.0 % in total, in the business sphere by 5.1 % and by 4.9% in the non-business sphere.

Differences in the wage level and in its growth rate between industries (CZ-NACE sections) are characterized in Graph 3. The graph suggests that the lowest wage level in Q3 2007 was recorded in 'fishing' (CZK 15,147); 'hotels and restaurants' (CZK 16,224); 'agriculture, hunting and forestry' (CZK 17,189). In contrast, the highest wage level was reached in 'financial intermediation' (CZK 39,634); 'electricity, gas and water supply' (CZK 27,167 Kč); 'real estate, renting and business activities' (CZK 25,275). The lowest relative year-on-year increase was recorded in 'health and social work; veterinary activities' (growth 5.0%, i.e. CZK 1,013). In contrast, the highest relative y-o-y increase, identically by 9.2%, was recorded in 'wholesale, retail trade and repair of motor vehicles, motorcycles and personal and household goods' (representing a nominal growth by CZK 1,903) and in 'agriculture, hunting and forestry' (nominal growth by CZK 1,444).
 
Graph 3 
When comparing divisions more important from the aspect of employment (employing a minimum of 20 thousand persons ³ ) the comparison at the CZ NACE divisions (more detailed classification on a two digit code) suggests that at both ends of imaginative ladder there are in individual reference periods the same industries with more or less stable ranking. In Q1-Q3 2007 the highest nominal average wage was reached in 'computer and related activities' (CZK 46,881), year-on-year growth being 6.1 % (by 1.5 percentage points less than the nationwide average). In contrast, the lowest nominal average wage was recorded in 'manufacture of textiles and textile products' (CZK 14,693), year-on-year increase being 7.7 % (by 0.1 percentage point above the nationwide average). Relatively high is also a difference in absolute sum earned in addition, year-on-year, by employees in the above industries. While in the first mentioned industry the gross wage increased by approximately CZK 2.7 thousand, in the following industry the employees earned by only CZK 1,000 more.
Other industries where employees receive best wages are the following: 'financial intermediation except insurance and pension funding' (CZK 46,717, year-on-year growth by 7.8 %, i.e. CZK 3, 388) and 'electricity, gas, steam and hot water supply' (CZK 30,597, year-on-year growth by 6.9 %, i.e. CZK 1,965). Among industries where employees receive the lowest wages still belong the following: 'agriculture, hunting and related service activities' (CZK 15,615, year-on-year growth by 8.6 %, i.e. CZK 1,241) and 'hotels and restaurants' (CZK 15,828, year-on-year growth by 9.9 %, i.e. by CZK 1,424).

When comparing divisions irrespective of the number of employees the highest nominal wage (division 'air transport' – CZK 56,848) was 4.8times the nominal wage of employees in the industry paying the lowest nominal wage ('manufacture of wearing apparel; dressing and dyeing of fur' - CZK 11,724). Year-on-year, the average wage in the industry paying the highest wage increased by 12.9%, i.e. by almost CZK 6.5 thousand, in the industry paying the lowest wage it increased by 6.5 %, i.e. by approximately CZK 700. The inter industry wage differences (per FTE persons) increased year-on-year, the variation coefficient of average wages (by CZ NACE divisions) was 0.8 percentage point up reaching 36.5 %.

The year-on-year real wages in the CZ-NACE industries (CZ-NACE sections) compared with the nationwide average are shown in the following graph.

Graph 4 
In comparison of wage development made for sectors suggests that the highest average nominal wages have been paid for a long time in financial institutions, insurance companies and pension funds. In Q1-Q3 2007 the average wage ( per FTE persons) in the financial institutions was double the national average, of which private national institutions (employing approximately 10 thousand persons) paid wages 1.7times the national average and foreign controlled private institutions (employing approximately 55 thousand persons) 2.1times the national average. In contrast, the average wage of employees in the sector of households (i.e. wages of unincorporated natural persons reaches approximately 65 % of the nationwide average. In the sector of non-profit institutions serving households the wages make about 77 % of the average wage in the whole of the CR. The average wage level, though, is fundamentally affected by the non-financial corporations sector and the government sector. Employees of these sectors make up about 95 % of the set of units measured.
 
The average nominal wage in enterprises and organisations which employ 250+ employees reached CZK 23,327 (per FTE persons), in enterprises with 50-249 employees it reached CZK 20,576 and in enterprises with 20-49 employees the average wage accounted for CZK 19,862. It should be noted again that all the above mentioned statistical data refer to a set of reporting units which does not include enterprises with less than 20 employees, financial institutions and organisations of non-business sphere irrespective of the number of employees.

---

¹ The data refer to business sphere enterprises with 20+ employees (in financial intermediation irrespective of the number of employees) and all non-business sphere organizations. They only refer to employees under employment contract with reporting units. Persons performing public office, such as members of Parliament, senators, full-time councillors at all levels, judges, etc. are excluded.
² In this connection it is appropriate to remind what does the average gross monthly wage mean. It concerns the share of wages and salaries (incl. premium pays, directs remunerations and bonuses, refund of wages etc.) per one employee regardless the fact whether this employee has a university degree and responsibility for the operation of the whole company or is a person working in the same company as a blue-collar. From this point of view it does not show, what salary does each concrete employee receive. It is also important to be aware of the fact that an employee receives net salary, while the gross wage is such, from which the employer pays appropriate amounts on health and social insurance, policy of employment and advance income tax. Whether the average gross monthly nominal wage reaches whatever level, it is important to take into account the fact that results of the structural statistics, when data on earnings of individual employees are available state that approximately two thirds of employees have a lower wage than the national average. Currently the CZSO publishes a publication “Structure of Earnings Survey 2006“, offering the information not only about the average wage but also about the median level of the gross wage (e.g. by sex, age, employment etc), which reports on the employee wage in the middle of the wage distribution (the publication is available on: /produkty/struktura-mezd-zamestnancu-2006-3phrc73bp3)
³the survey does not include enterprises with less than 20 employees