While Czech companies have seen healthy growth in their profits in the last year and a half, their employees have seen little change in their pay packets, Hospodářské noviny reported on Monday. Firms are instead opting to reinvest their gains or use them to cover losses sustained during the crisis, the business daily said.
Privately held enterprises in the Czech Republic experienced a year-on-year jump in profits of 13 percent in 2014. Their employees, however, received pay rises of approximately 2 percent and will have to wait until at least 2016 for faster increases.
The prime minister, Bohuslav Sobotka, is in favour of workers benefitting sooner. If companies’ profits are rising thanks to current prosperity they ought to share them with their employees, he said.
According to a Czech National Bank estimate, average salaries in the private sector will grow by 2.3 percent this year. Next year that figure should grow markedly faster, reaching 4.3 percent, the central bank says.
The growth of the Eurozone economy, and especially the German economy, will help export firms in particular to grow, Česká spořitelna bank analyst Jan Šedina told Hospodářské noviny.
Mr. Šedina said the Czech National Bank’s intervention to weaken the Czech crown against the euro in November 2013 was one reason that Czech industrial producers had seen a boost in profits.
The chief economist at ČSOB bank, Petr Dufek, said companies were opting to cover losses sustained in the preceding years rather than pass profits on to staff. They have also begun investing more, as evinced by data from the Czech Statistics Office.
Indeed, in 2014 companies put more than CZK 1 trillion into machinery, plants and other equipment. Such investments expanded by more than 2 percent, the highest rate recorded since 2008, before the Czech Republic felt the impact of the global financial crisis.
Firms in the Czech Republic mainly invest using their own money and do not make great use of bank loans, ČSOB’s Petr Dufek told Hospodářské noviny.
Jan Šedina of Česká spořitelna said the problems experienced by the Czech economy in recent years, including a rise in joblessness, had led employees to become nervous of making strong wage demands.
The unions are also unimpressed with the situation, Hospodářské noviny reported. The chief economist of the Federation of Trade Unions, Martin Fassmann, said his organisation had recommended that members push for “fully justifiable” 5 percent pay rises, but so far this year increases had not even reached 2 percent.
Employers take a different view, unsurprisingly. Bohuslav Čížek, an analyst for the Confederation of Industry, said industrial producers envisaged average increases of 1.9 percent this year and would be unwilling to raise salaries by any more than 1.5 percent in 2016.
State employees will drive overall pay growth next year. They have already been promised rises of at least 3 percent.