Earnings Disparities in the Czech Republic: The History of Equalisation

Statistical and sociological surveys are used to show the long-term development in earnings disparities. A considerable equalisation in wages occurred in three phases: the first one occurred during the Nazi occupation, then in the 1945-1948 period and finally after the post-Communist victory. The Communist ‘rewarding’ system was characterised by the predominance of demographic factors, the decline of secondary and especially tertiary education and the priority given to productive branches. After 1989, the general “needs” principle is being replaced, however hesitantly, by the “market” principle. Increasing returns to tertiary education were observed, the gap between gender somehow attenuated and the age profile of earnings became flatter. Market adjustment is uneven between sectors of ownership and branches of industry and moreover there exists a backlash primarily in the professional public services.