Czech labor shortage crisis deepens as unemployment falls and job vacancies rise

The Czech economy is in uncharted territory. While low unemployment is usually seen as a good indication of a healthy society, in the context of a chronic shortage of workers facing many Czech industries, an unexpected decline in unemployment this August has highlighted concerns about the lack of active job seekers.

From seasonal agricultural work to heavy industry and the hospitality sector, a lack of employees is causing problems for businesses up and down the country as they struggle to adapt to the post-pandemic world.

Unemployment fell in the Czech Republic to 3.6 percent in August, down from 3.7 percent in July, according to statistics from the Labor Office of the Czech Republic. Although small, the decline is significant because unemployment rates normally rise at this time of year due to the entry of new graduates into the labor market. A decline in unemployment during this period demonstrates that the Czech labor market is now a “buyer’s market” for prospective employees in the wake of the Covid pandemic.

“It is obvious that unemployment is not the main problem facing the Czech economy,” Deloitte chief economist David Marek told tyden.cz. “On the contrary, labor shortages do not allow the country to take full advantage of the global economic recovery after the pandemic, in addition to supply chain problems and missing materials,” he added.

August’s unemployment decline was accompanied by a rise in job vacancies. At the end of the month 363,114 jobs were available through labor offices, almost 22,300 more than were available in the same month last year. Labor shortages are such that there is now less than one available candidate per vacancy on the Czech jobs market.

The highest levels of unemployment were seen in the Moravian-Silesian region (5.4 percent), the Ústi nad Labem region (5.3 percent), and the Karlovy Vary region (4.7 percent). The lowest share of unemployment was recorded in the Pardubice region, where only 2.3 percent of people are out of work.

Most current job seekers are unskilled workers without a high school diploma. “As for division by profession, at the end of August there were the most unskilled and auxiliary workers in the records of the Labor Office of the Czech Republic, namely 76,804,” said the Labor Office.

Various ways to fix the labor shortages afflicting the Czech economy have been put forward. Prime Minister Andrej Babiš has proposed making it easier for low-skilled foreign workers to obtain work visas in the Czech Republic, a proposal rejected by the current Minister of Labor and Social Affairs Jana Maláčová (ČSSD).

“It is simply wrong to flood the local labor market with third-country nationals who will push Czech wages down,” the Social Democrat Minister said, arguing that breaking down prejudices over the employment of older people and young mothers is a surer way of filling labor shortages. Analysts argue the relative lack of part-time employment available in the Czech Republic is responsible for the exclusion of such groups from the labor market.

Lower unemployment and increased numbers of job vacancies may be good news for job seekers in the Czech Republic, but it may spell long-term trouble for the Czech economy. A continued lack of available employees shows the country still struggling to adjust to life after pandemic restrictions.