Prices have joined a tight labor market to create a highly volatile wage market. Will wage demands create a vicious cycle of price increases leading to salary increases leading to price increases?
Is the extraordinary outlier position of the Czech labor market going to force an economic reckoning? Czech job vacancies are exceptionally high across the board, and particularly in construction, real estate, and, worryingly, in professional/scientific/technical jobs. Outlying positions tend to force the economy to find a new balance. Some believe CNB interest rate policy- or, some whisper, exchange rate policy- can restore stability. Others say this might be the same as believing painkillers can heal a broken arm.
Top executives met this week in AmCham offices to discuss where wages are headed. Their answer? Higher by anywhere from 5-10%. This may disrupt ongoing operations, and already is delaying some investments. In some cases, the inability to find engineers has shifted production to Poland and other countries. The group will gather again in June to see whether the cracks in the market have widened.
We would like to thank Jaroslava Rezlerova of Manpower and Sandor Bodnar of Hays for providing data and insight for the session.