Even the die-hards have changed their minds. Only a third of companies did not give their people a raise this year.
The financial situation of households and the tight labour market have done their part in swaying the opinion of companies. Higher wages were seen by 66% of employers – even in cases that the company could not cover from its revenues. But Czech managers are already more conciliatory in their outlook for next year. They want to give employees a raise, but they expect that the rate of increase will fall far short of expectations. And according to a survey conducted by the consultancy RSM, one in ten companies can only conclude that some employees dissatisfied with the increase in their remuneration are likely to leave.
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Czech companies were split in two going into 2023. The first was ready to take the side of its employees and help them fight the rising cost of living. But exactly 51% of employers hoped to do without a pay rise.
“In the end, companies did not stand idly by as they watched their employees’ living costs rise, and those that might have wanted to were forced to raise wages by a tight labour market. Now, at the turn of the year, their outlook appears to be more sober. They do want to give raises, but to a lesser extent – they know that they will not please everyone, and more often they count on the possibility that they will part with even experienced colleagues,” says Monika Marečková, managing partner of the consulting company RSM, commenting on the survey results.
At almost half of employers (45%), they can now look forward to a Christmas bonus or a 13th salary. For some employees, this is already a common variable component of pay, which can be influenced by the economic performance of the company, the performance of the individual or is just a standard end-of-year bonus, for others it is a way for the employer to compensate for this year’s lower wage growth.
“We don’t, we will explain the situation to the employees”. If there is a raise, it will usually be by units of percent.
But this is one that a large proportion of workers will have to get used to. As the new year approaches, companies are unwilling and unable to dip into their savings again, and the rules of the compensation package make it difficult for them to offer previously popular non-financial bonus options such as cultural or recreational allowances.
These will be subject to stricter taxation from January, making negotiation often a challenge for HR managers. They will be the ones tasked with explaining why the company cannot increase wages as some employees would expect.
“About half of employers want to give raises next year. But compared to this year, it is likely to be a smaller increase. In about half of the companies, where they are already sure of the growth rate, it will be 5 to 10%, in the other half 2 to 5%. However, the brave category of companies that increased by more than 10% last year has almost disappeared in the outlook for next year,” comments Monika Marečková from the consultancy RSM.
Thus, employees and employers in the automotive, transport and logistics, pharmaceuticals and healthcare and, somewhat surprisingly, the construction sector have the highest chances of a positive corporate climate – almost half of them are planning to increase their colleagues’ remuneration by more than 5%.
Finally, the RSM survey shows that in a number of companies, they even explain to their employees the demands of the wage policy with direct reference to government savings and the situation of the company. Indeed, it is not uncommon for employees to continue to expect pay rises in line with inflation. In one in ten companies, therefore, they are counting on having to part with colleagues whose wage possibilities will not be met by the company.
“Unfortunately, Czech companies continue to lack their own wage strategy, on the basis of which they would be able to explain to employees the exact conditions of wage growth. Only one in five companies has one. Even among medium-sized companies, however, such an approach is much more common abroad,” adds Monika Marečková.
The consolidation package is easy for companies to understand
On the other hand, the labour law rules contained in the consolidation package are very well known and understandable to companies. On average, only less than 4% of survey respondents are confused about any of the newly proposed rules related to agreements concluded with colleagues working on a temporary or permanent basis, revisions of documents and new obligations related to the digitisation of contracts.
However, not all changes are likely to have the effect the government hoped for. One of the more challenging adjustments – that of the relationship between employers and “contractors” – has already been resolved by most companies. Employers are prepared to maintain cooperation with them and, for example, employment agency workers will not threaten existing jobs. However, we cannot look forward to the rise of part-time jobs, as only 10% of respondents plan to introduce them. On the other hand, almost half of the companies will be satisfied with an affidavit from the existing workers on FTE or DPT, which will not change the current situation.
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Previous results of our survey can be found HERE.
