Czech government raises minimum wage by 7%, well below inflation

The Czech government on Wednesday approved raising the minimum monthly wage by 6.8% to 17,300 crowns ($758.41) from 2023, holding the increase down amid decades-high inflation.

The Czech government on Wednesday approved raising the minimum monthly wage by 6.8% to 17,300 crowns ($758.41) from 2023, holding the increase down amid decades-high inflation. Spending power in the Czech Republic has been hammered by inflation, which reached 18% in September before easing to 16.2% last month, as households feel the impact of a steep rise in energy prices in the aftermath of Russia's invasion of Ukraine.

Real wages fell by almost 10% in the second and third quarter, while monetary policymakers have said they had not seen signs of a wage-inflation spiral and have kept interest rates stable in the second half of 2022 despite elevated price growth. Companies have also kept wage hikes subdued for now compared to pay increases seen in other central European countries.

Unions had sought a higher increase in the minimum wage. The government estimates the minimum wage should reach 40.5% of the average wage in 2022, according to materials approved at a Cabinet meeting on Wednesday.

In the first half of 2022, there were 128,000 people, or 3.6% of the total workforce, getting the minimum wage, according to the materials. ($1 = 22.8110 Czech crowns)

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