Forecasting Future Salaries in the Czech Republic Using Stochastic Modelling

Abstract

Abstract Background: In spite of the course of the economic crisis of 2008, there have not been changes dramatic to the extent that they would strongly alter the behaviour of the trend in the Average Gross Monthly Wages and the Monthly Wage Medians in the Czech Republic. In order to support public and monetary planning, reliable forecasts of future salaries are indispensable. Objectives: The aim is to provide an outline of the behaviour of the average gross wages and the gross wage medians of the Czech business sphere up to the end of 2018 using an optimised random walk model and an optimised ARIMA Model with a constant. Methods: Consumer price indices were used in the confrontation of the behaviour of the Average Gross Monthly Wages and the Monthly Wage Medians with the behaviour of inflation in the Czech Republic. The Box-Jenkins methodology is used for the time series modelling. Results: The Czech Average Gross Monthly Wages and the Monthly Wage Medians in the business sector will continue to grow more rapidly than the Czech inflation growth, expressed by consumer price indices. Conclusions: It is possible to expect that the rising trend of the Average Gross Monthly Wages and the Gross Wage Medians will be more rapid than the growth of inflation.