The Czech Republic is one of the Eastern European economies that, despite its socialist past, is catching up economically with Western Europe[1]. However, in addition to the increase in social welfare and overall national income, this process is naturally associated with a form of income and wealth inequality which is perfectly natural in modern market economies.
The Liberalni Institute calculated that with an average wage of CZK 40,086, the total cost per employee is 63% higher, i.e. CZK 65,376. This is the second year of the Cost of an Employee project, which the Liberalni Institut publishes in cooperation with the Slovak think tank INESS and the German FNF Foundation. The aim of the project is to calculate the total cost of a job for different types of employees.
In an interview with Seznam Zprávy, the head of Madeta (a Czech dairy company) Milan Teplý stated several facts that contradict basic financial knowledge. He began the interview by saying that Madeta will be profitable this year. However, he immediately added: “It’s a sin to be in profit, we won’t get subsidies.” We do not understand this. Why should a company that is making profit seek subsidies and ask the state for support?
Along with the increase of inflation in Poland and in the whole world, the discussion about its causes intensifies. There are many voices that the main reason is an external supply shock – the prices of energy and food. It is useful, in the analysis, to distinguish within CPI inflation, a core inflation and the rest of it. Core inflation is an inflation rate that is devoid of the most unstable components such as food and energy prices.
In line with expectations, the tax burden has therefore fallen compared to last year. In absolute terms, the average employee now pays a curious CZK 666 more per month to the state than last year (not adjusted for inflation), but this is only due to the growth in average wages.
The solutions to combat inflation that Danuše Nerudová proposes are not good ones. A price cap on energy can lead to nothing but shortages. Financially incentivizing households and industry to reduce energy consumption is useless in a world of market prices.
Czechs have to hold out for one more month. After June 17, 2022, they will start earning for themselves. Until then, for 167 days, they work only for the state. That makes this year one of the least free since the Liberal Institute has been counting Tax Freedom Day since 2000.
The US Federal Reserve System (Fed) has announced that it will raise interest rates. They have been at zero since the start of the pandemic and since the last recession in 2009, they hit their highest level in 2019. But even in 2019, they were very low, with an effective rate of about 2.5%.
While for the second year now we have been tracking new numbers of coronavirus-related cases and deaths several times a day, and estimates for the cost of the economic lockdown range between two and four billion CZK a day (for the Czech Republic), another crucial figure has escaped our attention.
The term “wage” and its size are very important in national discussions about labor markets, taxes, and insurance payments, but also as a part of international comparisons for investors deciding to build a factory or place investments in a specific country.
