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Wages in ČR to grow 3 pct in 2010, almost 5 pct in 2011 /25. 06. 2010/
The average nominal wage in the Czech Republic could grow by 2.1 to 3.1 percent this year and by 3.9 to 4.9 percent in 2011, the Ministry of Labour and Social Affairs has said. The average real wage could rise by 0.3 to 1.3 percent in 2010 and by up to 2.3 percent next year, the ministry said in an analysis of the development of households' incomes and spending in 2009 and a forecast for the next period. The average pension could reach Kc10,088 at end-2010, compared to Kc10,043 at end-March.
"Considering that pensions make up almost 100 percent of the total revenues of households of pensioners, we can expect incomes of these households to stagnate," the ministry said. According to the forecast, the average pension could reach around Kc10,557 in 2011, a growth of 4.6 percent. Households' purchasing power will in the entire year 2010 probably be influenced by the waning effects of the crisis, further drop in employment, higher year-on-year inflation and effects of the austerity measures adopted to make public finances healthier.
"The drop in performance of the Czech economy will probably at first slow down and later could turn into a moderate growth," the ministry said. Gross domestic product (GDP) in constant prices should grow by around 0.5 to 1.5 percent this year and by 2 to 3.5 percent in 2011. Expectations as regards the development of inflation are accompanied by a considerable level of uncertainty, according to the ministry. The ministry expects the consumer price index to move in the interval of around 1.5 to 2.5 percent. The development of non-market prices will mainly depend of the development of housing prices, above all the fact that rents in flats subject to deregulation will continue to grow during the year. Gas, heat and fuel prices are also likely to rise.
The development of prices in the other categories of goods and services will probably be similar as last year, the ministry said. Households' budgets were last year influenced by the drop in the performance of the Czech economy, the analysis showed. GDP fell by 4.1 percent year-on-year in real terms, which was also reflected in households' real incomes. However, households' purchasing power grew by 2.5 percent on average despite the development owing to a low inflation level. Although the economic crisis started to ease during 2009, this had almost no positive influence on households' incomes and expenditures.
The situation on the labour market worsened and the number of unemployed people grew, which resulted into a drop in consumer demand. In contrast, claims for welfare and unemployment benefits increased. The biggest source of households' financial incomes were wages. The average nominal monthly wage rose by 4 percent year-on-year to Kc23,598 in 2009. The average pension was Kc10,027, a growth of 7.3 percent compared with 2008. The number of jobless people receiving unemployment benefits rose by 51,000 year-on-year to 189,500. The average amount of an unemployment benefit increased by 10.2 percent to Kc5,851 a month. Households' spending grew by 3.7 percent on average last year. Total year-on-year consumer price growth was only 1 percent. Prices of housing, water, energy and fuels raised the price level. In contrast, food and transport prices pulled the level down. Still, households limited some of their expenditures such as spending on home equipment, recreation and clothing. They also took out loans less frequently.
Source: Praguemonitor.com, 25.06.2010. Full article can be found here.
