In the last election, populist politicians gave us all the benefits they could. They printed more and more money and put it into themselves, i.e., state employees and the economy as a whole. And logically, pensioners and other vulnerable members of society were also those who had electoral votes and therefore deserved to be underfunded.
Thus salaries and various benefits went up and up in nominal terms, proving how well our country was doing and how politicians were making sure that the common people got something.
But the frenzy to print more money has come to an end. Not only was so-called “healthy” inflation achieved, but also the decidedly unhealthy inflation that the politicians of that profligate era had excused the need for.
So the price of everything began to rise. Even the blind must have noticed. And conversely, wages are no longer rising as they used to.
In the second half of last year, wage growth had already begun to slow, despite shortages of workers in many places. Wages have not grown as much, and a similar situation is expected this year.
Wages are also expected to rise somewhere in 2019, mainly in sectors that have “lagged behind” in this regard in recent years, such as retail and low-skilled occupations, where people are still taking little pay. In other sectors, however, wages are no longer rising and are even set to fall.
Industry, manufacturing, and information technology continue to suffer from a shortage of suitable employees, but if they cannot find talent at home, they are said to look abroad rather than overwork their own citizens.
In the third quarter of last year, average gross wages in the Czech Republic increased by 8.5% y/y to SEK 31516, or 6% when taking into account the rise in consumer prices.
But that should be a thing of the past. It is not expected to improve as much or as quickly as it has.
Perhaps because even the politicians know they have gone too far. And they cannot continue to bribe voters by endlessly raising public sector wages. As a result, prices will rise.
And this year, as has been announced, prices will rise. And wages will not rise as much. So eventually we will probably reach the previous equilibrium, as we did before rising prices devalued savings.
Unless there is another election and there is a populist need to buy the votes of less affluent voters before that.
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