Page 21 - CE Outlook Regions 2022

According to the finance ministry, the effect of the easing of
anti-epidemic restrictions and the impact of strong labour demand in
some sectors, especially in industry, has had a positive impact on
the Czech unemployment rate, which could fall to 2.7% in 2022
thanks to the economic recovery.

The CNB projects the Czech unemployment rate to reach 2.8% in
2022 and 2.7% in 2023, while adjusted wage growth will temporarily
accelerate further in early 2022, aided by a further marked rise in the
minimum wage. KB said the unemployment rate in Czechia could
continue its declining trend in 2022, below its equilibrium, which will
also be an argument for higher CNB interest rates. In 2022, it should
stand at 3.5%.

Also according to the EC, the unemployment rate is expected to
remain low. The accelerating economic growth is expected to
improve labour market conditions in 2022, with the unemployment
rate falling to 2.6% in 2022 and 2.4% in 2023.

As stated by the CNB, fundamental market wage growth will
accelerate in early 2022 as demand for labour gradually recovers
further, supported also by a further increase in the minimum wage.
The upward pressure on wages will be hindered by subdued labour
productivity growth as a result of persisting problems in global
supply chains. Thus, in 2022, fundamental market wages are
expected to grow by 6.5%.

For 2022, KB´s analysts expect an increase in the average wage of
4.3%, followed, due to the tightness of the labour market, by a
further acceleration above 5%. In real terms, this would mean a
decrease in the average rate of 0.5% in 2022.

The CNB foresees that companies will substitute relatively
expensive and scarce labour with investments in an effort to

21 CE Outlook 2022 www.intellinews.com