September 14, 2017 / 10:29 AM / in 10 months

Main Czech trade union calls for bigger pay hikes as economy soars

PRAGUE (Reuters) - Czech labour unions should demand 8 to 10 percent wage hikes for private sector workers in 2018 - a bigger raise than in the past - as the economy is soaring, the head of the main trade union group said on Thursday.

The economy grew at the fastest quarterly pace on record in the second quarter, and unemployment is the lowest in the European Union, helping push wages up at the quickest rate in a decade as firms shell out more for harder-to-find staff.

Wage growth has been one of the main drivers of inflation in the open economy, with domestic consumption becoming a more important motor for economic expansion.

Earlier this week, the ruling coalition agreed to lift public sector wages by 10-15 percent from November.

Unions have asked for around 5 percent in pay hikes this year. But Josef Stredula told a meeting of the country’s workers’ groups that asking for more next year would not be a burden for firms, many of which are already complaining of lacking workers in a labour crunch.

“It is not our aim to destroy a company, we will act individually, as always. We will study the situation of the firm, how it is doing,” he told the Czech-Moravian Confederation of Trade Unions.

“Our demand for 2018 is 8 to 10 percent,” he said.

“(The demand) is more than it used to be, but the economy is working, everything is alright. We are not disrupting anything.”

The average Czech gross monthly wage rose by a higher-than-expected 7.6 percent year-on-year to 29,346 crowns ($1,339) in the second quarter. Inflation sat at 2.5 percent in August, above the central bank’s 2 percent target.

Employers rejected the unions’ demand for a “jump” in wages on Thursday, with the president of the Confederation of Industry of the Czech Republic, Jaroslav Hanak, calling it “pre-election coercion”.

The central bank has been closely monitoring wage growth as it begins the first cycle of steady interest rate tightening in the EU in about five years.

It delivered its first rate hike in almost a decade in August and several central bankers have spoken of chances of raising borrowing costs further this year.

($1 = 21.9170 Czech crowns)

Reporting by Robert Muller; Editing by Jason Hovet and Hugh Lawson

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