Salaries growing faster than labour productivity. Why does it matter?

Slovakia may lose its biggest competitive advantage in years to come.

Slovakia does not have to worry about the potential departure of investors to regional competitors. Labour costs are growing in neighbouring countries, tooSlovakia does not have to worry about the potential departure of investors to regional competitors. Labour costs are growing in neighbouring countries, too (Source: TASR)

Slovaks have achieved another record: The average monthly salary in the national economy amounted to €1,101 in the second quarter of 2019, according to the Statistics Office data.

This is an increase of 9.7 percent year-on-year and an analysis by UniCredit Bank states it has reached an 11-year high.

Uneven growth

At first glance, this development may be regarded as gratifying, although not everyone feels this to the same extent. Nonetheless, economic analysts give warning and point to the other side of the coin: salaries have been growing much faster than labour productivity for a long time.

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