Czechia ranks 10th in labor productivity growth among OECD countries

Capital investment and better national infrastructure have spurred Czechia's boost in labor productivity in the last decades. Staff

Written by Staff Published on 24.07.2023 16:40:00 (updated on 24.07.2023) Reading time: 2 minutes

A study by statistical company Lensa found that Czechia had the 10th-highest GDP growth rate per hour worked out of 38 OECD countries between 1995 and 2021. However, it was the worst-performing country out of the Visegrád Group which also contains Slovakia, Poland, and Hungary.

GDP per hour worked is essentially a measure of labor productivity. According to the Fensa study, GDP growth per hour worked rose by about 2.6 percent between 1995 and 2021.

At 10th place, Czechia was among the strong performers in the former Eastern Bloc, and also surpassed the likes of Germany, France, and the UK. The three European countries that topped the ranking were Latvia, Ireland, and Lithuania.

A slump in 2020, then a return to recovery

Improvements in industrialization, foreign investment, and the opening of multinational firms’ branches all underpin Czechia’s rise in labor productivity. Czech GDP has grown impressively since 1995 when it was USD 60 billion (CZK 1.3 trillion) to USD 281 billion in 2021.

Labor productivity growth slumped when Covid-19 hit in 2020, although it saw a rebound in 2021. In 2022 it performed solidly, although in December 2022 it declined by 1.4 percent year on year. On an index-based scale, Eurostat data shows that productivity in Czechia in the first quarter of this year rose to 107.3 points, from 106.7 in the final quarter of 2022 (100 points references the EU average for productivity).

Separate data from World Population Review shows that Czech labor productivity per capita is in the top 35 of all countries globally.

Unemployment is closely tied to labor productivity: Czechia has historically had a low unemployment rate – usually the lowest in the entire EU. According to CEIC data, Czech average unemployment between 1993 and today has been less than 6 percent, which is one of the best figures in the bloc.

According to the forecasts of The Economist Intelligence Unit, labor productivity growth from 2022 to 2030 will rise by 2.3 percent. “A stagnant working-age population will be the major constraint on growth, together with less momentum in capital spending in the latter part of this period and gradually slowing total factor productivity growth,” the company says. However, it estimates that income per head will gradually converge to France’s level by the end of the decade.

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