Analyzing Czech Unemployment: A Dynamic Labor Market

Unemployment in the Czech Republic remains stagnant. Yet, the labor market is anything but static. A significant number of people are transitioning from the industrial sector to the service sector, according to Petr Dufek, the Chief Economist of Banka Creditas.

At the end of December, the number of unemployed people exceeded the job vacancies for only the second time in five years. Nearly 280,000 people were out of work, while barely 272,000 job vacancies were available. The main reason behind this is seasonal changes as the number of unemployed people usually increases slightly towards the end of the year. The second reason is the decreasing number of job vacancies. Partly, the jobs are immediately filled by people who had previously lost their jobs, and partly due to the struggling economy, companies had to eliminate some positions they no longer needed.

The national unemployment rate continues to be low at 3.7%. However, in some areas like Karvina, it is 8.2%, and in Bruntal and Most, it is almost seven percent. These locations were previously heavy industry and mining-oriented, and their economic structure has not significantly changed.

The mild increase in unemployment compared to November, yet stagnation year-on-year, might suggest that nothing interesting happened in the job market over the year. This would be a gross oversimplification. The more detailed statistics show that many people are moving from one sector to another, especially from industry to services. This shift may not be apparent in unemployment data, but the employment structure is changing.

The problem is with the economic structure, which has frozen in northern Moravia, northern Bohemia, and southern Moravia and has not changed much. Little business is developing there, big investors are not coming, and in the meantime, young people often leave to look for work elsewhere. Despite the economic recovery, the unemployment rate is expected to remain below four percent this year, as industrial companies will continue under pressure.