When the coronavirus crisis began a year and a half ago, economists feared that a financial crisis would follow. Massive redundancies were to be the result, as happened, for example, after the last crisis in 2008. However, contrary to predictions, unemployment has remained very low and has fallen for the fourth month in a row. Economists are now looking for the cause of these positive results.
In June it fell to 3.7 per cent, two tenths of a percentage point lower than in May and the same as in June last year. The decline is mainly due to the economic take-off following the easing of measures against the spread of the coronavirus.
“Those who predicted a year ago that COVID-19 would not significantly increase unemployment in the country should sign up. We were almost all worried about it then. But the situation today is that Czech unemployment is at the low level of the great times before the financial crisis in 2008,” said economist Daniel Münich on Facebook.
According to him, this is due to both government support programmes and the reluctance of the unemployed to register with the labour office. “The government’s Antivirus programs, the compensation bonus and so on helped a lot. Unemployment and other social benefits are low in our country and poverty motivates people to work at any cost. Unemployment support and other social benefits are so low in our country that people don’t even bother to register at the labour office,” Münich wrote, adding that another group of people who don’t register at the labour office are people in foreclosure, who prefer to work illegally.
In addition, he said, it was mainly foreign workers who are not eligible for unemployment benefits who were being laid off and thus “disappeared” from the statistics. “Czech employers are fair to their employees and do not dismiss them even in economically difficult times. Czech employers rationally calculate that if they lay off employees, they will not find them later,” he added.
Some got used to getting money even if they didn’t work
There are more than 350,000 unfilled jobs in the Czech Republic. “So we are in a situation where anyone who is genuinely interested in working can find a job very quickly. Unfortunately, however, we are witnessing a divergence between employees’ and employers’ ideas about pay. At the same time, in the coronavirus era, some employees got used to receiving money even when they were not working, which worsens their work ethic,” commented economist Štěpán Křeček on the data.
However, companies continue to jostle for employees. “Companies are feeling strong demand from consumers and are trying to increase production capacity. However, this is difficult given the lack of available labour. We are therefore starting to see situations where companies are scrambling for staff. This will lead to wage growth, but in real terms we will have to reduce it by a relatively high inflation rate,” Křeček said.
In the coming period, he said, people can be expected to change their jobs. “However, this will not be accompanied by an increase in unemployment, because there are plenty of job opportunities on the labour market. The situation could change if restrictive measures in the economy are reintroduced in the autumn. However, this is not yet the main scenario thanks to vaccinations,” he concluded.