Commentary on the development of average wages of employees - 1. quarter of 2004
Product Code: e-3134-04
In Q1 2004, the nominal value of the average gross monthly wage per actual persons was CZK 16 722 and the wage increased by CZK 1 356 (8.8%) year-on-year, which translates into the highest increase over last 2 and a half. The same relative increase was reached in Q3 2001 and a higher growth than this was last measured in Q2 2001 (9.1%). In Q1 2004, consumer prices rose by 2.3% and the real wage by 6.4%. In the business sphere the average wage increased by CZK 1 345 (+8.6%) to CZK 16 954 and the real wage was up by 6.2%. In the non-business sphere the average wage grew by CZK 1 409 (9.7%) to CZK 15 950, the real wage growing by 7.2%. The faster growth of the average wage of employees in the non-business sphere was due to adjustments to salaries and wages of employees in public services and administration made by the transition from 12-grade salary scale to 16-grade one, effective as of 1 January 2004.
The development of average wages in the two spheres differed a great deal. It was rather smooth in the business sphere, but the non-business sphere experienced a jump-like wage development depending on the dates the individual wage measures took their effect. The strategy in the area of remuneration adopted by enterprises on the one hand and resulting primarily from the adjustment to salary and wages scales on the other hand caused the wage levels of the two spheres to converge in the long run. The differences between the two spheres always increased in the first and third quarters as a rule, and the average wage level in the business sphere was higher than in the non-business one. In the second and fourth quarters, though, the wage levels were approaching each other due to regular payments of half of another (13th) pay in the non-business sphere, and sometimes the average wage level in this sphere was even above that of the business one. However, Q2 2004 can be expected to see an effect of the reduction in the 13th pay from the original 50% down to 10%.
Since there is a higher proportion of part-time employees in the non-business sphere, the following comparison of the two spheres uses average wage data related to full-time equivalent (FTE) employees, as such data take account of the length of work load.
Between 1998 and 2003, year-on-year annual increases2 in the business sphere ranged from about CZK 900 to CZK 1 200. The highest nominal increase in wages over this period was recorded for 2001. Relatively, the wages in this sphere grew fastest in 1998 (+10.5%), but the high consumer price index (10.7%) caused the real wage to fall by 0.2% in 1998. On the other hand, the highest growth of the real wage in the business sphere occurred in 2003 (+5.8%). In the non-business sphere this fluctuation occurred to a much greater extent – the increases over the same period were between CZK 250 and CZK 1 500. The highest nominal increase in wages over the same period was observed in 2003. Wages in this sphere grew relatively fastest in 1999 (+12.3%) when they were raised following stagnation of the wages scale in 1998. With the rather low inflation existing at the same time, quite a high growth of the real wage occurred in this sphere in 1999 (+10.0%). Contrary to this, the non-business sphere saw a fall in the real wage by 5.6% and 1.9% in 1998 and 2000, respectively. No similar development was observed in the business sphere.
In Q1 2004 the nominal wage in the business sphere amounted to CZK 17 353, which translates into a year-on-year rise of CZK 1 354 (+8.5% or +6.1% in real terms). The same rise in nominal wage was also measured in Q1 2003. In the non-business sphere the nominal wage reached CZK 16 832, rising by CZK 1 488 (+9.7% or 7.2% in real terms). The growth of real wage in Q1 2003 was higher (+14.1%), which was caused by the low comparison basis of 2002 – while the increase in wage scales in 2003 was started from 1 January already, in 2002 it did not begin until 1 March.
In comparing the wage development by CZ-NACE section (one-character code of CZ-NACE), the highest relative growth of the average wage per actual persons in Q1 2004 was recorded for ‘financial intermediation’ (+12.0% year-on-year), ‘construction’ (12.0%) and ‘education’ (11.8%). The nominal wage reached in ‘construction’ was CZK 673 up and in ‘education’ CZK 2 174 down on the national average, but in ‘financial intermediation’ it exceeded the national average more than twice (by CZK 19 331). The financial intermediation was also the industry with the highest nominal value of average wage, CZK 36 053 (a year-on-year increase of CZK 3 858).
‘Mining and quarrying’, ‘hotels and restaurants’, and ‘health’ were industries with the lowest relative year-on-year growth of average wage: +4.5%, +6.0% and +6.5%, respectively. While the average wage in ‘mining and quarrying’ stood by CZK 1 815 above the national average, ‘hotels and restaurants’ and ‘health’ were behind the average wage by CZK 4 491 and CZK 1 157, respectively. The lowest nominal values of average wage were recorded in ‘agriculture, hunting and forestry’, namely CZK 11 501 (an increase of CZK 832, +7.8%).
Seen in greater detail (two-digit code of CZ-NACE), three industries (employing at least 50 thousand employees, but excluding enterprises with fewer than 20 employees) with the lowest nominal average wage per actual persons were the following:
- ‘agriculture, hunting and related service activities’: CZK 11 189 (by CZK 5 533 below the national average, with a nominal or relative year-on-year increase of CZK 787 or 7.6%, respectively)
- ‘retail trade except for motor vehicles and motorcycles; repair of personal and household goods’: CZK 12 802 (-CZK 3 920, +CZK 765, +6.4%)
- ‘manufacture of furniture, manufacturing n.e.c.’: CZK 13 066 (-CZK 3 656, +CZK 1 301, +11.1%).
The lowest average wage was recorded for ‘manufacture of wearing apparel; dressing and dyeing of fur’ (about 29 thousand of employees) at CZK 9 799 (by CZK 6 923 below the national average, with nominal and relative increases of CZK 896 and 10.1%, respectively).
On the other hand, three industries (also with at least 50 thousand employees) with the highest nominal average wage per actual persons) were the following:
- wholesale trade and commission trade, except of motor vehicles and motorcycles: CZK 21 943 (+CZK 5 221 above the national average, with a nominal or relative year-on-year increase of CZK 1 577 or 7.7%, respectively)
- post and telecommunications: CZK 20 263 (+CZK 3 541, +CZK 1 359 or +7.2%)
- manufacture of motor vehicles, trailers and semi-trailer: CZK 19 010, +CZK 2 288, +CZK 1 813 or +10.5%).
The highest average wage was recorded for ‘financial intermediation, except insurance and pension funding’ (about 45 thousand employees), namely CZK 38 223 (by CZK 21 501 above the national average, with a nominal or relative increase of CZK 3 998 or 11.7%, respectively).
Comparisons of the wage development with regard to ownership reveals that the highest average wages were reached in the long run by businesses with both foreign and domestic capital, i.e. internationally owned businesses. On the other hand the lowest wages occurred in entities owned by cooperatives. The nominal average wage in the internationally owned businesses exceeded CZK 21 thousand in Q1 2004, whereas it was roughly half of that in cooperative enterprises. The second highest average wage was paid to employees of companies owned by foreign capital – next to CZK 20.5 thousand. The second lowest nominal wage was recorded for employees in organisations representing associations, political parties and churches. This form of ownership is rather insignificant when it comes to the share in employment, though. Contrary to this, the number of employees in private companies (although they do not include enterprises with less than 20 employees in this survey) was about one third of the total number of employees. The average wage established for them was about CZK 2 200 below the national average.
As far as average wage growth dynamics is concerned, below-the-average increases were recorded for associations, political parties and churches (+5.1%), foreign controlled businesses (+5.7%), and state-owned and cooperative enterprises and organisations (+8.0% each), all this with below-the-average nominal increases between CZK 600 and CZK 1 300. Below-the-average relative increases also include 7.4% for international companies, but with the nominal growth of almost by CZK 1 500 in this case. Wages in private companies increased by 9.3%, the nominal increase being about CZK 1 200. Wages in companies and organisations in municipal and mixed3 ownership grew fastest - by 10.3% and 11.0%, respectively, the nominal increases ranging from about CZK 1 400 to CZK 1 700.
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1 The data refer to business sphere enterprises with 20 employees or more (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.
2Absolute and relative increases are calculated in relation to the corresponding period of the previous year converted be governed by the same methodology.
3 Various shares of domestic capital