Wages rose at the end of 2023

Economic commentary by Jakub Seidler, Chief Economist of the CBA
Wages rose at the end of 2023 ilustrační foto
Average wage growth reached 6.3% in Q4 2023, slowing from 7.1% in the previous quarter. According to Reuters, the analysts' consensus was 6.5% and the CNB's estimate was 6.2%, so today's figure ended very close to the aforementioned estimates. Average annual inflation accelerated to 7.6% in the last quarter, hence real wages fell by 1.2% year-on-year (Chart 1). However, on a quarter-on-quarter basis, they have risen for the third quarter in a row. The average wage was CZK 46 013 and the median wage was CZK 39 685. For the whole of 2023, wage growth reached 7.5%, while the CBA forecast expects nominal wages to grow by 6.5% this year and the CNB by just under 6%. In real terms, they should grow by around 4%.

The fastest wage growth in Q4 was in the mining and quarrying and accommodation, catering and hospitality sectors, where the annual growth rate exceeded 10%, see table. On the other hand, the slowest growth was in public administration (+3.9%) and agriculture. In these two sectors, growth was also the weakest in terms of development since the end of 2019, with average wages rising by 25.6%, while in public administration by 17% (Table 1, last column).

In the end, wage growth was slightly stronger in market sectors (6.8%) and weaker in non-market sectors (4.1%), Figure 2, but the differences are only slight. Within the market sectors, the main contributor to the slowdown in wage growth was the weighted manufacturing sector, where wage growth slowed from 8.2% to 7.1% yoy. For non-market sectors, the slowdown was mainly driven by public administration (slowing from 7.1% to 3.9%), with education (rising from 3.4% to 4.8% yoy) acting in the opposite direction.

In quarter-on-quarter terms (seasonally adjusted), wages rose by 1.5% and have also been rising quarter-on-quarter in real terms over the past 3 quarters, as quarter-on-quarter growth outpaced quarter-on-quarter inflation. However, despite moderate real wage growth, wage levels remained more than 10% below their peak in 2021 last year.

Over the whole of last year, nominal wages grew by 7.5% (Chart 3), but given double-digit annual inflation, the year-on-year decline in real wages continued, albeit at a much milder rate (-2.9%) compared to 2022. This year, real wages are expected to rise, by around 4%, but part of the increase in net terms will be offset by the impact of the consolidation package.
Wage growth

blue: real wages
red: nominal wages

Average wage growth
Wage developments in market and non-market sectors

red: nominal wages
green: market sector
blue: non-market sector

Average wage growth