Workers at Hyundai Motor Co‘s Czech manufacturing plant will get an 11.7% pay raise on average from April, the company said on Monday.
In the export-oriented Czech economy, the car sector is a key driver and bellwether, but it is still struggling to rebound from supply chain problems of the past few years, mainly shortages of chips due to the COVID-19 pandemic.
“The automotive industry has had to face several difficult challenges in recent years,” Hyundai’s Czech plant said in a statement, adding “the above standard” pay hike was a compromise in that direction.
The Czech auto industry makes up a quarter of the country’s industrial production and employs 180,000 directly, and up to half a million indirectly.
Hyundai’s new collective agreement also includes two bonus payments over the next 14 months.
The company’s Czech plant has a capacity of 350,000 cars a year and employs more than 3,000 staff.
Soaring inflation has hammered people’s paychecks in the past year amid subdued nominal pay hikes. Real wages fell around 10% in both the second and third quarters last year. Central bank policymakers, though, have been on alert for any pickup in wage growth this year.
Average inflation reached 15.1% in 2022, the highest rate since 1993. The Czech National Bank forecasts inflation to ease to 10.6% in 2023, while it expects nominal wages to grow by 8.5%, up from an average 6.5% last year.
The central bank has kept its base interest rate at 7.00% since mid-June but has not ruled out the possibility of another hike, with risks of a wage-price spiral one factor to watch.
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