Introduction
In partnership with the company Trexima Zlín, the Czech Ministry of Industry and
Trade (MIT) conducted a survey of labor costs in businesses that are overseen by the Ministry.
This survey looked at overall industry wages in 2005, as well as the historical trends in these
wages over the period from 2002 through 2005. The survey also included an examination of
the compensation received by the various management levels of the businesses in these
industries overseen by the Ministry. The more detailed monitoring and analysis of the trends
in the changes of labor costs and management compensation in these companies is seen to be
of increasing importance – especially with respect to the Czech Republic's membership in the
EU and its integration into the labor and industry market structures of a unified EU.
1. Labor Cost Levels in the Industries Covered by the Ministry of Industry
and Trade during 2005 and Developments since 2002
The labor cost survey was conducted on the basis of a statistical sample and looked at
the trends in the wages paid by the businesses and organizations that fall within the MIT pool
of businesses during both 2005 and over the 2002 – 2005 period. The data was compared to
the average labor costs applicable across the entire Czech economy. For 2005, the survey
covered between 705,000-814,000 employees from 2,512-3,111 businesses – all of which fell
within the MIT pool of businesses. The character and the size of the sample groups captured
sufficient data to permit regional breakdowns of the industries looked at.
The average hourly wage paid by the businesses within the MIT pool of businesses
showed the following trends over the period from 2002-2005. In 2002, the average hourly
wage indicator saw a year-to-year change of + 5.7% and the average wage in 2002 was CZK
99.31/hour. In 2003, the wage indicator showed a year-to-year change of + 6.3%, resulting in
an average wage of CZK 105.53/hour in that year. In 2004, the year-to-year change dropped to
+ 5.2% and the average wage reached CZK 111.00/hour. In 2005, the data showed a year-toyear wage increase of + 4.5% and the average wage reached the level of CZK 115.95/hour.
The overall average hourly wages paid to the employees of the businesses that are part
of the MIT pool of businesses grew by 16.8% over the survey period. In the same period, the
average hourly wages paid by the businesses across the entire Czech economy grew by 18.8%.
In terms of the growth rate of average wages in the 2001-2004 period, the most
significant growth took place in the 'manufacture of building supplies' sector (+ 28.7%). The
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lowest level of growth, on the other hand, for average wages was seen in the 'tourism' industry
sector (+ 0.4%). In 2005, the highest average wages were reported in the energy sector (CZK
167.85/hour) and the lowest average wages were paid in the textile industry (CZK
69.06/hour).
Over the 2002-2005 period, the disparity between the average wages paid within the
MIT pool of businesses and the average wages for the entire domestic economy widened. In
2005, the average wages paid by businesses within the MIT pool of businesses were at the
level of 95.4% of the average wages reported for the businesses across the entire domestic
economy. In 2002, this ratio had been at a level of 97.5%.
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Average Hourly Wage Data for 2002-2005
(Comparison between the Industries Covered by MIT and the Overall Economy)
Chart Legend:
Axis:
(vertical) Average Hourly Wage (CZK/hour)
(horizontal)
Quarters (of the year)
(left to right)

MIT Industry Pool

Overall Domestic Economy

Annual Average – Domestic Economy

Annual Average – MIT Industry Pool
In a breakdown by region of the wages paid by businesses that make up the overall
domestic economy versus the wages paid by the businesses that are part of the MIT pool of
businesses, there was a substantial variation in disparity levels. For example, the wages paid
by the MIT pool of businesses were at an 87.0% level in Prague, while the same comparison
reversed and went to 104.2% in Central Bohemia.
The greatest increase in wages over the 2002-2005 period was seen in the Vysočina
Region (+ 22.3%) and the Central Bohemia Region (+ 21.0 %), followed by the South
Moravia Region (+ 20.5%). The lowest level of wage increases was reported in the Hradec
Králové Region, where the increase was 14.0%, followed by the Moravia-Silesia Region,
where wages grew by 14.4%.
The earnings multiple (wage gap) between the 12th (lowest) and the 1st (highest) wage
levels in the Czech economy increased to 5.41 in 2002 and to 5.79 in 2003. In 2004, the
multiple dropped slightly to a level of 5.76. In 2005, the earnings multiple reversed and went
back up again, increasing to a multiple of 5.92. The trend indicates that the differentiation in
the wage multiple is being widened in favor of more highly qualified (or skilled) labor. When
broken out into the individual wage levels, the greatest growth can be seen in the lowest 12th
and 11th levels as well as at the top 1st wage level. The least growth was seen in the 6th wage
level.
The average wages paid to the employees in the businesses that are part of the MIT pool
of businesses in 2005 – based on the level of education – ranged from a low of CZK
13,241/month for employees with a basic or unfinished (high school) education to a high of
CZK 39,377/month for employees with a college degree.
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When broken down into age categories, the highest average wages in 2005 was paid to
workers in the 60+ age group (CZK 129.78/hour) and in the 30-39 age group (CZK
122.51/hour). The lowest wages were paid to the 20 and below age group (CZK 65.69/hour).
When analyzed from the perspective of the size of the business, the data shows that in
the 2002-2005 period, the highest average wages were paid by businesses with 5,000 or more
employees. The lowest wage levels tended to be found in businesses with 24 or fewer
employees.
The businesses that are part of the MIT pool of businesses reported having paid lower
wages to women (CZK 91.11/hour) than to men (CZK 131.50/hour) in 2005. In 2005, the
average wages paid to female workers reached a level equal to 69.1% of the average wages
paid to male workers.
In a comparison of male and female wages paid to businesses in the overall Czech
economy, versus wages paid in the particular businesses that make up the MIT pool, men in
the overall economy received wages that averaged 3.1% higher and women received wages
that were approximately 10.0% higher – i.e. the businesses that make up the MIT pool tended
to pay lower wages across the board.
2. Compensation of Management in Businesses within the MIT Industry
Pool in 2005
The survey looked at the gross salaries paid to those individuals employed by the
businesses that are part of the MIT pool of businesses who held a management position in
2005, based on the KZAM–R classification.
The sample pool contained data on the earnings of 30,253 managers (of whom 9,668 are
women). The sample represented a total of 1,656 businesses that fall within the MIT pool of
businesses. The management staff was broken out for positions in the top three of the (above
identified) compensation levels. The 1st management level refers to senior management. The
2nd management level includes managers who directly report to senior management and who
manage their own staffs. The 3rd management level includes managers and supervisors who
directly report to 2nd level management and who also manage/supervise their own staffs.
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The data collected shows that generally, there has been an increase in the number of
managers employed by these businesses. In 2004 the average number of management staff
employed by the businesses that are part of the MIT pool of businesses was 20. By 2005, this
number had increased by 1 person at the 3rd management level and the total average size of the
management staff grew to 21 (vs. 20) persons (1 person at the 1st management level, 3 persons
at the 2nd management level and 17 persons at the 3rd management level).
The size and the structure of the management staff primarily depended on the size of the
company. Companies employing 99 or fewer staff were on average led by a 3-member
management team (the same as in 2004). Large companies with more than 3,000 employees
were on average run by 293 managers, positioned at the surveyed management levels (vs. 213
managers/supervisors in 2004).
In 2005, the average salary paid to the managers located the 1st, 2nd and 3rd management
levels and employed by the businesses within the MIT pool of businesses was CZK
614,000/year – i.e. CZK 51,167/month. In 2005, the growth rate in the average salary paid to
management dropped to the level of + 1.8% (from + 7.1% in 2004). In 2005, the salary growth
rate ranged from + 3.1% for the 3rd management level to roughly + 5.3% growth at the 1st
management level. Within the MIT pool of businesses, management salaries went up by
+ 1.8% and across the entire domestic economy, the rate of growth was + 1.3%.
The size of the management salaries was seen to be correlated to the following: The size
of the business, the average wage paid by the company, the longer term profitability trends in
the business within the respective industry and the type of ownership and the overall
profitability profile of the company. A strong relationship to the above factors was especially
evident in the 1st management level – i.e. senior management.
In 2005, the highest average salaries were paid to the senior management of business
with 1,000-2,999 employees and to the deputy directors and professional directors of
businesses with 3,000 and more employees.
The highest salary levels (CZK 821,000/year or CZK 68,415/month) were paid to the
management of companies where the average salary paid to the employees of these companies
was above CZK 20,000/month.
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The lowest paid group were the managers of co-ops whose average annual earnings
(CZK 817,000 or CZK 68,000/month at the 1st management level; CZK 576,000 or CZK
48,000/month at the 2nd management level; and, CZK 195,000 or CZK 16,300/month at the
3rd management level) did not even reach a level corresponding to 50% of the salary levels
paid to their counterparts in their sector.
Substantial differences were evident between the salaries at the 2nd and the 3rd
management levels. In the category of professional directors and deputy directors (2nd
management level), the highest salaries (CZK 1,153,000/year or 96,083/month) were
traditionally paid to chief financial officers, followed by human resource directors (CZK
1,112,000/year or 92,666/month) and marketing directors (CZK 1,102,000/year or
91,833/month). The lowest salaries were paid to the technical directors and investment
officers (CZK 907,000/year or 75,583/month) who replaced the operations managers, who
previously ranked in this bottom position.
In the data analyzed from the 2005 sample, the average annual salary paid to a manager
(without any differentiation for the different management levels) corresponded to 237.1% of
the average salary paid by businesses and companies within the MIT pool of businesses (a
management salary at the 1st management level had a multiple of 6.237, the 2nd management
level had a multiple of 4.202 and the 3rd management level had a multiple of 1.973).
In terms of the businesses across the entire domestic economy, the average management
salary reached a level corresponding to 239.5 % of the average wage.
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Comparison of Management Compensation at the Different Levels of Management
(Both MIT Pool and Overall Economy)
(in %)
Chart Legend:
Axis:
(vertical) Relationship in %
(horizontal)
Year
(left to right)

1st Management Level

2nd Management Level

3rd Management Level
The average management salary had the following breakdown: Base salary – 64.93%;
premiums and bonuses – 23.69%; extras and additional payments – 2.45%; other salary items
– 0.04%; and, reimbursements – 8.85%. The percentage breakdowns for these salaries varied
across the individual management levels. The salary structure showed a trend where the base
salary component was increasing at the expense of premiums and bonuses (the change was
roughly 0.5 percent).
Women represented 32.1% of the management employed by businesses within the MIT
pool of businesses (vs. 32.4% across the entire economy). In terms of the differences between
male and female salaries, the average salary paid to female managers reached only 62.1% of
that paid to men at the 1st management level; 73.5% at the 2nd management level; and, 53.1%
at the 3rd management level. The majority of the management positions staffed by women
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were at the 3rd management level (internal department managers), with companies having over
500 employees and with an average salary of CZK 200,000/year or 16,667/month (domestic
employers).
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