VSTE
Littera Scripta

ISSN (online): 1805-9112

Research ArticleOpen access

Czech employees are suffering from a decline in their real wages – Are they entitled to be paid more?

Vendula Hynková1, Renata Skýpalová1, Veronika Hedija2

  1. Ambis University
  2. Masaryk University

Abstract

The article deals with development of the average gross monthly nominal and real wages in individual regions and nationally in the Czech economy during the 2011 – 2022 period, with focus on 2022, the year of galloping inflation in the Czech Republic. It examines differences between average gross monthly real wages in individual regions of the Czech Republic and the national average of gross monthly real wage in 2022 There will be a discussion on how to raise the standard of living of households again, about the possibilities of economic policy and the circumstances and consequences of increasing nominal wages. The article presents development trends of the average gross monthly nominal, real wages, and the price level for the following years 2023 and 2024. In addition, the article reveals to which year in the past the household standard of living fell, according to the development of the average gross monthly real wages, at the national level and in Czech individual regions.

Keywords:Inflationgalloping inflationreal wagesnominal wagesstandard of livinganti-inflationary policyreal consumption

References

  1. Broer, T., Krusell, P., Oberg, E (2023). Fiscal multipliers: A heterogeneous-agent perspective. Journal of the Economic Society, 14 (3), 799-816. https://doi.org/10.3982/QE1901
  2. CAHUC, P., CARCILLO, S., ZYLBERBERG, A (2014). Labor Economics. Cambridge, Massachusetts: MIT Press. ISBN 978-0-262-02770-0.
  3. Caloia, F. G., Parlevliet, J., Mastrogiacomo, M (2023). Staggered wages, unanticipated shocks and firms? Adjustments. Journal of Macroeconomics, 76. https://doi.org/10.1016/j.jmacro.2023.103521
  4. Carvalho, C., Eusepi, S., Moench, E., Preston, B (2023). Anchored Inflation Expectations. American Economic Journal: Macroeconomics, 15(1), 1-47. https://doi.org/ 10.1257/mac.20200080
  5. CRUZ M. D (2023). Labor productivity, real wages, and employment in OECD economies. Structural Change and Economic Dynamics, 66, 367-382. https://doi.org/ 10.1016/j.strueco.2023.05.007
  6. CZECH NATIONAL BANK (2023). CNB forecast – autumn 2023. [online]. [accessed: 2023-12-12]. Available from: https://www.cnb.cz/en/monetary-policy/forecast/
  7. CZECH STATISTICAL OFFICE (2023a). Inflation, Consumer Prices. [online]. [accessed: 2023-10-01]. Available from: https://www.czso.cz/csu/czso/inflace_spotrebitelske_ceny
  8. CZECH STATISTICAL OFFICE (2023b). Average wages – 3rd quarter of 2023. [online]. [accessed: 2023- 12-11] Available from: https://www.czso.cz/csu/czso/ari/average-wages-3-quarter-of-2023CZECH
  9. STATISTICAL OFFICE (2023c). Average wages – 4th quarter of 2022. [online]. [accessed: 2023-09-18] Available from: https://www.czso.cz/csu/czso/cri/prumerne-mzdy-4-ctvrtleti-2022
  10. CZECH STATISTICAL OFFICE (2023d). Regional Statistics [online]. [accessed: 2023-09-15]. Available from: https://www.czso.cz/csu/czso/regiony_mesta_obce_souhrn
  11. CZECH STATISTICAL OFFICE (2023e). Public Database. Wages and labour cost. [online]. [accessed: 2023-08-13]. Available from: https://vdb.czso.cz/vdbvo2/faces/cs/index.jsf?page=statistiky&katalog=30852
  12. CZECH STATISTICAL OFFICE (2023f). 2. Basic characteristics of the territory, residential and administrative structure. [online]. [accessed: 2023-09-09]. Available from: https://www.czso.cz/csu/czso/13-1131-05-casova_rada 2_1_charakteristika_hlavniho_mesta_prahy
  13. CZECH STATISTICAL OFFICE (2023g). GDP Resources and uses – 4th quarter of 2022. [online]. [accessed: 2023-09-19]. Available from: https://www.czso.cz/csu/czso/cri/tvorba-a-uziti-hdp-4-ctvrtleti-2022
  14. CZECH STATISTICAL OFFICE (2023h). Average wages – 2nd quarter of 2023. [online]. [accessed: 2023- 09-09]. Available from: https://www.czso.cz/csu/czso/cri/prumerne-mzdy-2-ctvrtleti-2023
  15. CZECH STATISTICAL OFFICE (2023i). Average wages – 1st quarter of 2023. [online]. [accessed: 2023- 09-21]. Available from: https://www.czso.cz/csu/czso/cri/prumerne-mzdy-1-ctvrtleti-2023
  16. DAVIDSON, J., 1898. The bargain theory of wages: A critical development from the historic theories, together with an examination of certain wages factors: The mobility of labor, trade unionism and the methods of industrial remuneration. The Annals of the American Academy of Political and Social Science, 11, 103-105. Available from: https://www.jstor.org/stable/1009429
  17. Ellington, M., Martin, C., Wang, B (2023). Revisiting real wage rigidity. Journal of Money, Credit and Banking. https://doi.org/ 10.1111/jmcb.13056
  18. ENERGY REGULATORY OFFICE (2023). Households saved electricity on record in 2022. [online]. [accessed: 2023-09-26]. Available from: https://www.eru.cz/domacnosti-v-roce-2022-rekordne- setrily-elektrinou
  19. GALBRAITH J. K (2023). The quasi-inflation of 2021 - 2022: a case of bad analysis and worse response. Review of Keynesian Economics, 11(2), 172-182. ISSN 2049-5323.
  20. HANSEN N.-J., Toscani, F., Jing, Z (2023). Euro area inflation after the pandemic and energy shock: Import prices, profits and wages. [online]. IMF Working Paper No. 2023/131. [accessed: 2023-09-29]. Available from: https://ssrn.com/abstract=4493911
  21. Hayo, B., MÉON P.-G (2023). Measuring household inflation perceptions and expectations: The effect of guided vs non-guided inflation questions. Journal of Macroeconomics, 78. https://doi.org/10.1016/j.jmacro.2023.103558
  22. HUTTER CH., Weber, E (2023). Russia–Ukraine war: A note on short-run production and labour market effects of the energy crisis. Energy Policy, 183. https://doi.org/ 10.1016/j.enpol.2023.113802
  23. JUNG E. (2023). Wage rigidity and destabilizing spirals. Journal of Macroeconomics, 77. https://doi.org/10.1016/j.jmacro.2023.103546
  24. Kamin, S., Roberts, J (2023). Will a recovery of real wages obstruct progress toward disinflation? [online]. AEI Economic Policy Working Paper Series. United States of America. [accessed: 2023-09-15]. Available from: https://policycommons.net/artifacts/3867703/will-a-recovery-of-real-wages- obstruct-progress-toward-disinflation/4673916/
  25. Kinlaw, W., Kritzman, M., Metcalfe, M., Turkington, D (2023). The determinants of inflation. Journal of investment management, 21(3), 29-41. ISSN 1545-9144.
  26. Krugman, P (2022). The real wage gap and employment. In: The French Economy: Theory and Policy, 51-69. ISBN 978-100022972-1. https://doi.org/ 10.4324/9780429311055-3
  27. LONGE, F. D (2009). The Wage-Fund Theory. Read Books Ltd. ISBN 9781443790550.
  28. MANKIW, G. N., TAYLOR, M. P (2021). Macroeconomics (European edition). U.S., Worth Publishes. ISBN 9781464141775. McCORMIC, B., 1990. A theory of signalling during job search, employment efficiency, and "stigmatised" jobs. The Review of Economic Studies, 57(2), 299-313. https://doi.org/10.2307/2297383
  29. Miura, S (2023). Optimal inflation rate and fair wage. Quarterly Review of Economics and Finance, 88, 158-167. https://doi.org/10.1016/j.qref.2022.12.013
  30. RYNGAERT J. M (2022). Inflation disasters and consumption. Journal of monetary Economics, 129, S67- S81. ISSN 0304-3932.
  31. Szwacka-Mokrzycka, J., Lemanowicz, M (2023). The influence of inflation on the economic situation of households in Poland. European Research Studies Journal, XXVI(3), 119-132. ISSN 1108- 2976.
  32. Vildauer, R., Kohler, K., Aboobaker, A (2023). Energy price shocks, conflict inflation, and income distribution in a three-sector model. Energy Economics, 127. https://doi.org/10.1016/j.eneco.2023.106982
  33. WALKER F. A., 1891. The doctrine of rent, and the residual claimant theory of wages. The Quarterly Journal of Economics, 5(4), 417–437. https://doi.org/10.2307/1879357