Rapid growth of real wages

In 2005, after several years of variations in increase and decrease real wages in Slovakia significantly increased. According to the statistical data the average nominal monthly wage in the national economy increased by 8.2% in the first half of 2005. Simultaneously also the real wage increased by 5.6%. It is the highest increase in real wages in the last five years that was incurred by a relatively low inflation. And what is more important, the real wage increased in all branches of economy.

According to recent data of the Slovak Statistical Office (Štatistický úrad Slovenskej republiky, ŠÚ SR) fast increase in wages continued in Slovakia also in 2005. While in 2004 the average monthly nominal wage of an employee in the national economy was SKK 15,825, in the first half of 2005 it increased up to SKK 16,272. This wage increase meant also a significant increase in real wages. Though in 2004 in comparison with 2003 the nominal wages increased more than at present (by 10.2%), the real wages increased only by 2.5%. In the first half of 2005 in comparison with 2004 the real wages increased more than twice and that increase represented 5.6%. Although it could be assumed that the increase in real wages will be probably slowed down before the end of 2005, mainly due to the gas price increase since October 2005, it could be predicted that the increase in real wages will be much higher than in the previous year. Development of real wages in selected branches of the national economy in August 2005/2004 and in August 2004/2003, is shown in Table 1.

Table 1: Development of real wages in August 2004 and 2005
Branch Real wage growth index Change in the percentage points
2004/2003 2005/2004
Industry 106.4 102.4 - 4.0
of whichMining and quarrying 103.3 102.5 - 0.8
-Manufacturing 106.0 102.5 - 3.5
-Electricity, gas and water supply 112.9 105.6 - 7.3
Construction 105.7 104.5 - 1.2
Wholesale 105.8 109.1 3.3
Retail trade 103.5 107.7 4.2
Sale and repair of motor vehicles 109.9 101.3 - 8.6
Hotels and restaurants 101.5 105.9 4.4
Transport and storage 99.9 103.8 3.9
Post and delivery services 93.5 111.4 17.9
Telecommunications 105.3 115.4 10.1
Real estate, renting, business activities and other services 98.8 110.1 11.3

Source: Indicators of economic development - sectoral monthly real wage indexes 2004/2003 and 2005/2004. ŠÚ SR 2005.

Although the average monthly real wages increased in 2004 in comparison with 2003 too, in most of the branches there still exist branches where despite the increase in nominal wages the real wages decreased, eg fishing, hotels and restaurants, health and social work (SK0502104F). The above data prove increase in real wages also in those branches of the national economy where they decreased last year. At the same time, the data show that also the speed of increase of real wages in individual branches changed. Although the real wages generally increased, in some branches the speed of their increase significantly changed (eg decreased in sale and repair of motor vehicles and increased in post and delivery services). The current development of wages in Slovakia has a positive character also due to the fact that in comparison with 2004 the increase in real wages was in all branches of the national economy.

Although the real wages increase in Slovakia, many employees are not satisfied with the level of their wages. According to the results of the opinion poll realised by the agency MVK (Daily SME 27 June 2005) as many as 45% of employees were not satisfied with the level of their wages. In case of workers this dissatisfaction is even higher - up to 54% of respondents were not satisfied with their wages. Probably this situation is connected with the general lack of vacancies, mainly in regions with a high unemployment rate -people take any type of work even if they are not satisfied with working conditions and wages.

The low level of wages in Slovakia is often criticised by trade unions who tried to negotiate during collective bargaining their increase each year. Average wages are pushed up also by increase of minimum wage of which increase the trade unions attempt each year. One of their arguments for increase of minimum wage has been the increase of average wages in the national economy, too. Although the minimum wage has been increasing each year, its share in the average wage has been decreasing and the trade unions are not satisfied with this. On one hand, the employers argue that the permanently increasing minimum wage in Slovakia decreases their competitiveness and some employers try to persuade the government to cancel the institute of minimum wage. On the other hand, the current wages in Slovakia belong to one of the lowest wages among the EU member states. At the same time, if we compare the differences in wages in the EU15 and the new member states, these are significantly bigger than the differences in productivity in those countries.

This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.

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