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Czech PM calls on Ahold to raise wages as pay becomes election issue
December 2, 2016 / 3:07 PM / 8 months ago

Czech PM calls on Ahold to raise wages as pay becomes election issue

3 Min Read

PRAGUE, Dec 2 (Reuters) - Czech Prime Minister Bohuslav Sobotka on Friday urged one of the country's largest retail firms, the Dutch-based Ahold, to raise wages as income gaps with western Europe increasingly become a political issue.

The Czech Republic has reaped jobs and growth from foreign investment in the past two decades, but wages are still below half the European Union average. Many specialist workers have emigrated and many lower-skilled workers are dissatisfied.

Sobotka cannot force Ahold's hand but his intervention reflected a growing focus on wages ahead of a general election due next October. Sobotka's centre-left Social Democrats have lagged their centrist rivals in opinion polls.

"We have to try to raise wages, not to be just a cheap assembly line," he told reporters after hosting a meeting of Ahold local management and unions at the prime minister's villa.

"I supported Ahold employees, because I liked that they spoke up," he said.

A spokesman for Ahold said the company and unions would issue a statement later on Friday.

Ahold employs 17,500 people in the Czech Republic. It has offered to raise wages for shop staff by a steep 8.5 percent in 2017 and 7 percent in 2018. But unions also demand a boost for this year.

The average monthly pre-tax wage of shop staff at Ahold is 15,500 crowns, or 573 euros, compared to a national average wage of just over 1,000 euros.

The pay demands come as employers struggle to find workers. The country has the lowest unemployment rate in the EU, 3.8 percent in October, according to Eurostat methodology.

Using a strong fiscal position provided by the first budget surplus in two decades, the government agreed earlier this year to raise wages for medical workers and teachers.

While deep poverty is very rare in the Czech Republic, low wages in many sectors mean there are around 1 million Czechs in what is called "income poverty", according to the Czech Statistical Office.

That is defined by income from 10,220 crowns per month for an individual up to 28,615 crowns for a family of five. The minimum gross monthly wage will rise from 9,900 to 11,000 crowns in January.

The central bank expects wage growth to continue next year, helping inflation recover toward the bank's 2 percent target. ($1 = 25.3920 Czech crowns) (Reporting by Robert Muller; Editing by Tom Heneghan)

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