OSW Report

A country with non-existent unemployment

The special characteristics of the Czech labour market
The special characteristics  of the Czech labour market

Since 2016, the Czech Republic has had the lowest unemployment rate among EU member states and since 2017 among OECD countries. This is surprising to many observers, especially in Western Europe, as former communist states have for years been associated with high unemployment and structural problems. This situation on the labour market is an effect of several factors, including: the structure of the Czech economy which was undergoing its formation for many decades; the economic policy adopted over the past few years; and the economic revival in the global economy, noticeable especially since 2014. The low unemployment rate and the increasingly visibly rising real wages translate into improving living standards for Czech society. However, this situation adversely affects companies which are looking for ways to deal with a labour shortage. One of the solutions is the automation of production processes but employers are also insisting that the country should become more open to workers from other countries, especially Ukraine. The trade unions are opposed to this because they fear that an influx of immigrant labour will slow down the rate at which wages are rising. At the same time, there is a debate in the Czech Republic about the extent to which the present economic model contributes to the country catching up with the Western economies and what should be done to speed up the convergence.