Czech Ruling Party Claims Wage Growth Should be a Priority for Next Government, According to Reuters

By Robert Muller and Jan Lopatka

PRAGUE – The next Czech government should focus on sharing the benefits of robust economic growth with workers and transitioning to a higher wage economy, according to Lubomir Zaoralek, leader of the ruling Social Democrats in the upcoming election.

The center-left party is trailing its coalition partner, the ANO movement, by significant margins ahead of the vote scheduled for October 20-21. However, Foreign Minister Zaoralek remains optimistic that the party can attract voters who are concerned about economic equity.

The Czech Republic, marked by its heavy industrialization and a substantial automotive sector, has seen strong economic growth, recorded at 4.7 percent in the second quarter. This growth has led to labor shortages and increased wage demands across various sectors.

Rising wages in the private sector have prompted public sector workers to seek higher pay, resulting in government salary increases for healthcare and education professionals who have historically been undercompensated.

Zaoralek emphasized the importance of inclusivity during times of prosperity, stating, “If society is to remain united… then that has to be for all.” His key priorities include wage growth, education, and elevating living standards to match those of Western Europe.

The outgoing government has consistently raised the minimum wage annually, with the most recent increase setting the wage at 12,200 crowns per month, effective next year. Additionally, teacher salaries, which rank among the lowest of skilled professions in OECD countries, are also set for an increase.

Zaoralek noted the necessity for a new economic model that supports higher-margin goods, even if it results in the closure of companies reliant on cheap labor. This shift is seen as essential, as wage growth in export industries has already pushed businesses to innovate in order to sustain profit margins. Currently, Czech workers earn about one-third of what their German counterparts make.

To align more closely with Western neighbors, Zaoralek stressed the importance of maintaining dialogue with EU partners as the bloc navigates its post-Brexit future. He expressed interest in acquiring observer status in the eurozone but cautioned against rushing into eurozone membership, noting potential resistance from coalition partners.

This viewpoint diverges from that of outgoing Prime Minister Bohuslav Sobotka, who advocates for establishing a timeline for joining the eurozone, while a majority of Czechs reportedly oppose such a move.

Zaoralek remarked that elections can be decided in the closing days of campaigning, and the Social Democrats still have the potential to secure a role in the next government. As no party is expected to achieve an outright majority, previous polling has often been unreliable.

A significant challenge for both ANO and potential coalition partners arises from a recent parliamentary vote allowing police to charge ANO’s founder and chairman, billionaire Andrej Babis, with fraud over EU subsidies, which he denies. Zaoralek stated that he cannot envision Babis being part of the next cabinet if he faces legal charges, although he did not completely rule out a coalition with ANO if Babis is not the prime minister.

“It is tough to build a coalition with someone who is being prosecuted… That is unimaginable,” he concluded.