A completely unrealistic situation. Experts buy Fiala’s promise to catch German wages

“Four years was not enough, I need eight years, and then we will have salaries like in Germany and major universities and companies. We will no longer be a collection point,” Fiala said on Czech television.

This would mean, of course, that nominal employment in factories and offices will grow by at least a quarter every year. According to Eurostat, last year the average annual gross salary in Germany was more than 50,000 euros, ie more than 1,200,000 CZK, or one hundred thousand per month. In the Czech Republic, it was not even half as much, and also significantly lower than the European average.

If the prime minister’s words were to come true, Czech earnings, ie the wages of employees in companies and the wages of civil servants, should more than double on average within five years compared to today. In addition, with the assumption that the earnings of the Germans and Austrians would not grow.

According to statistics, the average nominal salary in the Czech Republic rose by 6.5 percent year-on-year to 45,854 crowns in the second quarter of this year. However, even in terms of net wages, the Germans are now twice as good as the Czechs.

Fiala said that he needed an even stronger mandate, which he would use, among other things, to “create a place here for companies to succeed well and be able to pay the wages they have in Bavaria” to people. “And the steps we are taking lead to that,” said the prime minister in Sunday’s Questions with Václav Moravec.

However, he had a hard time with economists with his vision. “The idea that any economy would be able to catch up in four years is even less than the plan of the Ministry of Industry and Trade to be among the ten best European economies by 2040,” said Datarun economist and data analyst Petr Bartoň.

According to him, now a typical German worker earns 2.3 times more in euros and an Austrian worker 2.5 times more than a Czech worker. “No government can double the wealth of its workers in four years. Maybe if the regime in North Korea fell, something like this would be possible,” said Bartoň.

He also said that in order to achieve the prime minister’s optimistic vision, the Czech Republic would have to move closer to Germany and Austria in the next four years about six times faster than it was able to do in the twenty last year. “During them, we recorded higher economic growth. Now we are not growing at all,” he said.

Economist Jakub Komárek from PAQ Research noted that the Czech Republic has seen the biggest fall in real wages in the EU since 2020, and under the Fial government the difference between real wages, i.e. when adjusted for inflation, has deepened here and in Western countries.

“In their program statement, the government promised more investments in education and science or stable labor taxes, but the truth was the opposite. However, Western wages can only be approached through a higher value-added economy. This requires more than just wishful thinking – real investments in increasing labor productivity, reforms in the tax system increasing motivation to work and fundamental changes in secondary education,” Komárek told Novinky.

He said that the German economy in particular is now facing serious problems, but that the Czech economy is strongly linked to it. “Any economic change in our neighbors can be expected to be very much reflected in our real wages as well,” Komárek said, adding that the path to prosperity is still possible – through lower taxes on labor -work, eliminate some tax exemptions or sustainable investments in the knowledge economy.

The fact that Czechs could have the same high wages as Germans or Austrians within five years is unrealistic, according to Trinity Bank economist Lukáš Kovanda. “The fact is, on the other hand, that both Germany and Austria in particular have surpassed the Czech Republic in terms of wages over the past five years, as shown by OECD data . So salaries in our country lag behind salaries in Austria and Germany even more than in 2019,” he said.

“This is a very ambitious promise and commitment, when I consider that we have reached less than half the German wage in 35 years. And it doesn’t matter if they are rough or clean. If I had to imagine such a – from my point of view, completely unrealistic – scenario, then in the next four years average wages would have to grow by 20 percent a year and the exchange rate of the koruna would have to remain absolutely stable, “Petr Dufek, Banca Creditas analyst, responded to Fial’s words.

The question, according to economists, is also what this would mean in terms of increased inflation or loss of competitiveness.

“If we were to keep up with Germany in terms of net wages, in the next six years net wages in the Czech Republic would have to increase by just over 75 percent, while in Germany they had to go without stopping. And that, of course, is completely unrealistic,” summarized Akcenta analyst Miroslav Novák.

According to Fiala, the next parliamentary elections will be largely about “whether we will move somewhere between Slovakia and Hungary, or whether we will be a permanent part of the West, if we will have a salary here as people in Germany or the Austria, which I offer”.

Economists and trade unions also do not believe that Czech wages and salaries could rise quickly to German and Austrian ones. “The first day of April is yet to come. If he really meant his words, then at that time the next day we can agree on a salary increase for state employees of 6.9 percent, just as the politicians put themselves. But that is not happening at all, he is not interested at all, so in my opinion it is an empty lie, an attempt to manipulate the public and gain points in the elections,” Josef Středula, chairman Czech-Moravian Federation of Trade Unions, launched to Fiala.

He said that the actions of the government are against increasing employment. “For example, in the area of ​​abolishing the guaranteed salary in the private sector, where the government, from our point of view, broke the minimum wage guidelines in Europe,” he told Novinkám.