What lies ahead for the Czech labor market? 5 key insights

Turbulence from political, legislative and economic perspectives is leading to a reduction in the pace of hiring among Czech employers.

William Nattrass

Written by William Nattrass Published on 03.06.2024 12:46:00 (updated on 03.06.2024) Reading time: 4 minutes

The Czech labor market has been running on rocket fuel in recent years, with employers battling it out for talent amid a boom in job openings. Now, leaner times may be on the horizon for jobseekers, as an uncertain year forces employers to slow down hiring processes.

In a Q2 employment outlook survey conducted by Manpower Group, one of the world’s largest employment agencies, 24 percent of Czech employers said they expect their staffing levels to decrease, 44 percent of employers predict no change in their staffing levels, and 30 percent expect an increase. Although the labor market in Czechia will, therefore, continue to grow, the optimism seen in the labor market over recent years appears to be giving way to a more cautious approach.

What’s behind the slowdown?

A slowdown in hiring is a symptom of uncertainty among employers. This uncertainty may, at first glance, seem surprising; after all, the global economy has not yet faced violent shocks in 2024 of the same kind seen in preceding years. A “soft landing” is forecast, with economies avoiding severe recessions despite monetary tightening to combat high inflation.

This does not, however, mean all is rosy for businesses. The effects of high inflation continue to be felt, while a tense geopolitical situation, with ongoing conflicts in Ukraine and the Middle East, adds to uncertainty. 2024 is, meanwhile, the biggest year of elections in history, with more voters worldwide – including in key economic trendsetter the U.S. – heading to the polls than ever before.

The resultant uncertainty is likely a key driver for a decline in the global Net Employment Outlook measured by Manpower, which fell by four points quarter-on-quarter to 22. Manpower’s survey, conducted in 42 countries and territories, measured responses across a total of 40,385 employers, including 525 employers in Czechia.

Different sectors, different stories

The Net Employment Outlook for Czechia – taken by subtracting the percentage of employers expecting an increase in staff from the percentage expecting a decrease – currently sits at five percentage points, a full 17 points below the global average. This is three points worse than Q1 2024, and 10 points worse than this time last year.

Should this make us worried about the health of the Czech economy? According to Jaroslava Rezlerová, Managing Director of Manpower Group Czech Republic, the labor market will “continue to grow moderately”, with a positive balance maintained despite the political and economic uncertainty facing employers.

The Czech labor market has a relatively high inertia and negative economic changes are very slow to translate into layoffs, as companies retain existing employees even in times of a lack of orders due to the difficulty of recruitment,” Rezlerová points out.

It’s important to bear in mind that the labor market situation varies from sector to sector. “The most optimistic industries are Healthcare, Finance, Real Estate, Energy, IT and Communication Services. The public and not-for-profit sectors reported significant declines,” Rezlerová adds.

The employment market in the Czech healthcare sector is turbocharged, with a Net Employment Outlook score of 24, increasing by a remarkable 16 points since Q1 2024. The employment outlook has strengthened in four out of nine sectors measured by Manpower since Q1, weakened in four, and seen no change in one. In a year-on-year comparison, the outlook has weakened in seven out of nine sectors and strengthened in only one.

East-west divide

Czechia’s employment outlook doesn’t just vary sector-by-sector, but also region-by-region. Manpower measured outlooks in three regions: Prague, Bohemia and Moravia. While Prague and Bohemia predict increased staffing levels, Moravia is expecting a decrease.

The division in expectations between Bohemia, with an Net Employment Outlook score of 10 points, and Moravia, with a score of -2, may underline deeply-rooted economic divides between the western and eastern parts of the country. At the same time, staffing environments across all three regions have weakened in a year-on-year comparison.

This situation, according to Rezlerová, demonstrates a “significantly lower level of optimism compared to the last two years” throughout the country.

Big fish keep growing

Employers at all organization sizes apart from “Mini” organizations still expect increased staffing levels. Large organizations employing 1000-4999 people are the most optimistic, with a Net Employment Outlook of 22 points, rising by a full 20 points since the previous quarter. Micro organizations have also seen a surge in employment outlook scores.

In a longer-term context, though, the shift away from rampant optimism in employment outlooks is plain to see. All organization categories apart from large organizations reported weakened employment outlooks compared to this time a year ago.

Is Czechia falling behind?

In a global context, the slowdown in hiring in Czechia doesn’t look great. Czechia is now among the weakest countries in the world in terms of employment expectations.

There are, however, some brighter spots amid this downbeat assessment. The strength of the Czech healthcare sector is significant on a global scale, with Czechia ranking fifth globally for its quarterly increase in the employment outlook in this sector.

While a cooling labor market is no reason to panic about the state of the Czech economy, it’s a sign that the opportunity for rapid growth recently felt by many organizations may be ebbing away. In its place, a focus on stable, sustainable growth is becoming the new watchword for Czech businesses.

This article was written in association with Manpower. Read our sponsored content policies here.

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