Employees in the Czech Republic are uploaded. He buys much less with his salary, it’s already cracked

Something is not right in the Czech Republic, at least from the economic point of view. As the only country in the entire European Union, it has not yet achieved the economic performance of 2019, i.e. before all the crises that have come in recent years. While other economies are already growing merrily, the Czech Republic has stalled in an unprecedented way.

Difficult period

It is not just some virtual statistic. The truth is that employment remains at a record high, which is not exactly a sign of a crisis, but according to economists it is simply due to the fact that there is not enough skilled labor in the country, so literally anyone with arms and legs is hired .

But if we look a little deeper, we will find out what a mess we are in. “Real wages fell in the third quarter of this year for the eighth quarter in a row. This is by far the most persistent and most consistent decline in real wages – and therefore people’s living standards – in the entire modern history of the Czech Republic.” stated the renowned economist Lukáš Kovanda in his text.

According to him, it has never been this bad for so long. He drew attention to the fact that until the current slump, real wages had been falling for only four quarters in a row for the longest time. The current decline is already twice as long, although it finally seems that the situation could turn around.

Interest rates will fall

However, it will be more likely just a statistical effect, as inflation is falling, so wage growth will hopefully already catch up. For the Czech National Bank, the latest figures are proof that fears of a wage-inflationary spiral have not been confirmed. This happens when employees manage to push through such wage growth across the board that completely covers inflation or even surpasses it. At that time, however, there is a risk that inflationary expectations will break down and the economy will fall into a long-lasting era of price increases.

Also read: Soon everyone will know how much you earn. It will be posted on the bulletin board, the Czechs are already rioting

In any case, it seems that the CNB should finally start reducing interest rates. This will lead to several effects with different impact. First, loans will finally become cheaper, especially mortgages, and real estate sales will probably start again. On the other hand, those who have become accustomed to higher rates on savings accounts and term deposits will pay. Interest rates there will probably fall rapidly.

Foto: Shutterstock