Wage gap closing between Prague and the regions

Pressure on wages in the manufacturing sector is driving up wages outside the capital.

The difference between the average salary for people in Prague and for people working in other areas is slowly closing, as some regions are adding more higher-pay jobs. Since the end of the economic crisis, the wage gap has closed up by some Kč 500.

The gap is still substantial, though. Employees in Prague still earn an average of Kč 7,700 a month more than the average elsewhere in the country. The gross average wage in Prague in 2017 is Kč 37,046 and outside it is Kč 29,346.

But six years ago in 2011, the gap was larger, with Prague employees earning some Kč 8,221 more. Prague workers then saw Kč 32,337 and elsewhere it was Kč 24,116.

The gap has decreased in all regions, according to an analysis by daily Pražský deník based on figures from the Czech Statistical Office (ČSÚ) and other sources.

Central Bohemia has the closest wages to Prague, followed by employees from the Plzeň region and South Moravia. All of these regions have wages of at least three-quarters of Prague's. Central Bohemia is at 82.8 percent, Plzeň is at 77.1 percent and South Moravia at 75.8 percent

The Karlovy Vary region has the biggest gap, with wages at 68.3 percent of Prague's.

Plzeň's wages have been catching up the fastest, as manufacturing industry wages have been rising in an effort to attract workers, according to experts. Prague has fewer manufacturing jobs than most other regions.

Plzeň's wages have closed in those of Prague by 6.8 percent since 2011. The Moravia-Silesia region has made the slowest progress, closing in by just 2.8 percent in the same time.

More than 220,000 jobs have been created since 2013, with the regions being the biggest beneficiary.

Unemployment has reached historical lows, putting pressure on wages.

Experts add that if exports of industrial products continue to do well, wages in the regions will continue to increase.

But wages are not the only factor. In Prague, services are more expensive than in the regions. With a Prague salary, someone would have to save for 15 years to buy an older two-room flat. Outside of the capital, this would take seven years. For groceries and consumer goods, customers around the country pay approximately the same amount.

The situation in the Czech Republic is not unusual. Most European countries have a region that is significantly higher than the others. Wages in Bratislava, Warsaw, and Budapest are roughly one-third higher than the average in Slovakia, Poland, and Hungary, respectively. In London, they are nearly 50 percent higher than the rest of the UK.

Statistics also show while Czechs work at 62 percent of the average European wage, the value of what they produce is at 87 percent of the EU average. Aside from Luxembourg and Ireland, it is the highest disparity in Europe.

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