Abstract:

Rewarding work in the Czech Republic has been discussed for a long time. According to data from the Organization for Economic Cooperation and Development, the Czech Republic has significantly lower wages compared to developed Western European economies. There is lower purchasing power from the net average wage in the Czech Republic than in the OECD countries of Mexico, Hungary, Slovak Republic, Turkey and Poland. The importance of the contribution of this paper is to assess interrelationships of the minimum wage, average net wage and labor productivity in the Czech Republic versus the European comparison. To complete this paper there have been  used methods of analysis, comparison, induction and deduction. Data sources include the Czech Statistical Office, the European Statistical Office, Ministry of Labour and Social Affairs of the Czech Republic and the Organisation for Economic Co-operation and Development. The comparison of OECD countries concerning the level of average net wages and data on labor productivity in terms of GDP per hour and per person revealed differences, in average annual net wage expressed in purchasing power parity in OECD countries, with the Czech Republic adjacent match about differences in labor productivity in terms of GDP per hour and per person in USD. The theory that the differences in average net annual wage expressed in purchasing power parity matches the level of labour productivity per hour and person (also expressed in purchasing power parity) is not true. For example, in the case of Luxembourg, the Netherlands, Norway or Switzerland. These countries have much higher minimum wage levels, both when comparing absolute values, and when expressed in purchasing power parity. A higher minimum wage leads to an increase in other wage levels, which affects the amount of the average gross wage. Higher wages bring higher levies on premiums and taxes. Raising the minimum wage can be seen as a way of fostering economic growth and the path to raising living standards.