Unemployment Trends in the Czech Republic and Future Labor Market Forecast

Although the share of unemployed people in the Czech Republic remains relatively low – it even fell in April – but in the long term, their number is increasing, and on the other hand, vacancies are decreasing. Over the past two years, the number of unemployed people has increased by around 36,000 to 280,000, and vacancies have decreased by around 76,500. There are 268 thousand of them. Does this mean the situation is getting worse and businesses are hiring less?

Yes, to some extent we will see a trend of vacancies decreasing gradually from the first quarter of 2022. But if we look at what the Czech economy went through, there was an energy crisis, last year we had a recession, and so it’s not that bad. It was certainly not a negative impact on the labor market like twelve or thirteen years ago after the great financial crisis. The job market is still good. In the Czech Republic, the unemployment rate is very low. The lowest rate in the European Union. But this does not apply only to the Czech Republic, but to the whole of Central Europe, to the countries of the Visegrad Four.

What is the quality of the vacancies anyway?

For most it is very low. If we look at them more closely, for about three quarters of the positions, basic education is enough for the candidates, which gives information about the type of work involved. Most of them are physically demanding, possibly in multi-shift operations, and of course the financial reward may be low.

Why are most of the positions for people who are not so qualified in the offer of the Labor Office? Does this mean that companies are not looking for qualified people as much or that they are looking for them in other ways?

Both options are more or less correct. The first thing is that many companies still need less qualified workers, which can be seen from the offer where they are looking for assembly workers, builders, various handling workers. These are people who don’t need to be able to do anything, but above all they need to be in good health.

And as for those highly qualified positions, they are usually sought after in slightly different ways. Through groups or through LinkedIn and the like.

Does the structure of jobs registered by the Labor Office say anything about the Czech economy and the future of the labor market?

It shows that some companies are still producing products and services with a lower added value. As for further development, it will depend on how they deal with automation, digitization and the rise of artificial intelligence. Unskilled jobs are already being automated to some extent, but not at a fast enough pace to reduce the demand for these workers. In the future, companies will have to automate much more and also produce far more products with higher added value. But that’s really a question for years, maybe decades.

The Ministry of Labor estimates that 300,000 jobs will disappear within eight years, and another million positions will need to be filled. Is education or the retraining market ready for this?

Not that I want to question the study in any way, but I have already read many similar studies. It is true that artificial intelligence will take away job opportunities, but the question is whether it will really happen that quickly and whether there will really be that many of them.

Regarding your question: in my opinion, the labor market is not completely ready for this. If we look at the amount of money that is put into retraining courses, how many people complete them, how much is spent in relation to the gross domestic product on an active employment policy, we are lagging behind compared to the large countries of Western Europe, such as Austria, the Netherlands or Denmark. This can be a problem for the economy. Active employment policy must be strengthened. When it comes to education, it’s hard for me to judge there, I’m not an expert on that.

The unemployment rate fell slightly in April. What drew her down, business or services?

It is primarily a case of seasonal work. In March and April, they start mostly in agriculture and construction. If I were to break it down by industry, the decline in unemployment is driven more by services than industry. He hasn’t been doing too well lately. The situation in services is better after all, and as domestic demand recovers, retail sales and household consumption recover, they have the potential to create more jobs this year.

Why is the business failing?

We had an energy crisis here, with which we are still dealing with the feedback. Another problem in general is weaker foreign demand. This is not only the area of ​​the last months, but the area of ​​​​the last year and a half. Several companies have fewer new foreign orders and instead “go away” from the older ones, to come. Another problem is the bad situation in industry in Germany, where production has been falling for more than a year. And this also affects Czech companies, which are connected to demand from there.