Angela Merkel probably expected her refugee policy to make her a political piñata during her visit to Prague. Refugees force people to define just where the us becomes them. Some draw the line closer to the self, and some farther. No matter what she decided, someone was going to protest.

Mrs. Merkel must have scratched her head, though, when the papers reported that she would be asked to explain why Czech incomes have not converged more with German pay. This is not in her remit. She has some influence on German wages, but not absolute or direct. She can speculate why Czech companies pay the wages they do, but her only real contribution is the money Germany sends to Brussels that is used to finance investment through EU structural funds. 

Nevertheless, Germany is the largest investor and the dominant destination for Czech exports. Salary convergence would have multiple effects on that relationship. It is, therefore, an interesting thing to study. How much convergence has occurred? Could it have gone faster? Is it going too fast? Let’s take a look at the numbers.

Read full article attached below (in English and in Czech).