Salaries rising at fastest pace in seven years
PRAGUE (Reuters) — Czech wages grew by a real 4.0 per cent in the third quarter as firms continued to lift salaries at the fastest pace in seven years to cope with the European Union's tightest labour market.
Unemployment in the Czech Republic has fallen to the lowest level in the 28-member EU, leaving many firms worried a growing labour shortage might become a brake to growth while also boosting price pressure as the central bank looks to exit its ultra-loose monetary policy next year.
The Czech Statistical Bureau said on Monday real wage growth accelerated in real terms in the third quarter while nominal wages grew by 4.5 per cent year-on-year, both matching highs seen in the first quarter. The average monthly nominal wage grew to 27,220 crowns ($1,070.89).
With the export-reliant economy growing firmly for the past few years, wage growth has become a key indicator for the central bank as it tries to push up inflation and exit an ultra-loose monetary policy of keeping the crown weak since 2013.
Policymakers have been guiding the market with more certainty to a likely mid-2017 exit from its weak crown policy, once inflation is forecast to return to a two per cent target.
The central bank expects the economy to expand by 2.8 per cent this year and three percent in the next two years, following a larger rise last year that boosted employment.
In October, the jobless rate dropped to an eight-year low while job vacancies rose to 139,063 and have more than doubled since 2015, according to data from the state labour office.
"The Czech labour market is totally exhausted, there is nowhere to take from," Radek Spicar, deputy chief of the country's Confederation of Industry, said on Czech Television on Sunday. "Our member firms have to reject orders and they are being penalised for that by their customers."
Eurostat data, using a different methodology than the Czech labour office, shows the Czech jobless rate fell to 3.8 per cent in October and was lower than 4.1 per cent recorded in Germany, the EU's economic powerhouse.
The central bank forecasts nominal wage growth should pick up pace and accelerate to five per cent in 2017.
The hot jobs market is starting to be felt by companies both large and small. Earlier this year, the main association for the car sector, a major exporter, warned that it needed tens of thousands more workers.
