Tenth worst in EU: Conditions on Czech labor market worsen for third year

Labor market conditions in the Czech Republic have worsened for the third consecutive year, ranking as the tenth worst in the European Union, according to the Index of Prosperity and Financial Health. The report, created by Česká spořitelna and the data portal Europe in Data, attributes this decline mainly to low work flexibility and significant gender pay inequalities.

Despite having the lowest unemployment rate in the EU at 2.6 percent in 2023, the Czech Republic continues struggling to create favorable conditions for employees. The country ranks 18th out of 27 EU countries in labor market conditions, down from 15th in 2022. Analysts point to low work flexibility as a significant factor.

Many Czech employees lack access to part-time work, even if they want it, deepening inequalities and limiting the economic activity of stay-at-home parents. Part-time jobs also help prevent significant drops in earnings.

The best labor market conditions are found in the Netherlands, Austria, and Nordic countries such as Denmark, which all feature high work flexibility. In the Netherlands, for example, 24 percent of employees can choose where and when they work, including flexible hours and remote work.

In contrast, only 14 percent of Czech employees have this option. The share of part-time workers in the Netherlands is 42.8 percent, compared to just 6.9 percent in the Czech Republic—the ninth-lowest in the EU, said Milan Mařík, an analyst from Europe in Data.

Eastern and southern EU countries also face challenges in labor market conditions. Spain, for instance, has the highest unemployment rate in the EU, with a low number of part-time jobs and limited work flexibility, similar to many countries with struggling labor markets.

While low unemployment in the Czech Republic suggests a strong job market, it can also indicate underlying problems. Economists consider the current unemployment rate below a "healthy" level, which they estimate to be almost double the current rate.

Low work flexibility also contributes to gender inequality in the Czech labor market. The gender pay gap increased by more than a percentage point to 17.9 percent, the third highest in the EU.

“The Czech Republic has consistently ranked among the three worst in the EU for the gender wage gap, even though the gap has been gradually decreasing since 2016,” said Martina Myslíková from the Institute of Sociology of the Czech Academy of Sciences.

She noted that the more significant decrease during the Covid-19 pandemic was primarily a statistical anomaly, as low-income women frequently lost their jobs.