In the 1st to 3rd quarters of 2000, real wages grew by 2.4% (3.3% in the 1st quarter and 2.0% in the 2nd and 3rd quarters). They grew by 3.7% in the business sphere (4.6% in the 1st quarter and 3.2% in the 2nd and 3rd quarters) and dropped by 1.4% in the non-business sphere (a 0.8% drop in the 1st quarter and a 1.7% drop in the 2nd and 3rd quarters). Current development of the real wages is consistent with the labor productivity and thus should not lead to the internal and external imbalances. However, trade unions announced that they would like to achieve an increase of real wages by 3% or 4% next year. This could stimulate domestic demand to grow excessively with the negative impact on inflation and trade balance. We suggest two-percent increase would be suitable for next year to keep macroeconomic stability.
The cabinet approved yesterday that Revitalisation Agency (RA) should be closed in July 2001. RA did not fulfil its tasks sufficiently and currently its job could be done by Konsolidacni banka that has its own department specialised on dealing with revitalised companies.
The Czech currency lost ground on a technical correction on Monday following all-time highs to the euro. The FX market is also cautious due to the Thursday’s CNB board meeting. The koruna ended at 34.52 against the euro. Against the dollar koruna strengthened to 40.64 from late Friday’s 40.81.
Bonds were again very quiet on Monday. We did not see any trades during the day, market seems to be waiting for Friday's government bond auction. Tuesday "trading" is likely to be similar to Monday.
Current benchmark prices: MoF 6.75/05 98.70-00 (unchanged), MoF 6.30/07 93.45-75 (unchanged), MoF 6.40/10 91.40-70 (unchanged).
(David Marek)