Czech Republic Economy News

Illegal employment agencies on the rise in the Czech Republic

According to a Grafton Recruitment study released last week, around 10% of employment agencies operating in the Czech Republic are illegal. These so-called “grey agencies”, used by over 100.000 people according to Grafton’s estimates, use temporary gaps in employment to hire temporary workers while disregarding a number of official regulations, operating at the borders of legality and stripping workers of their social rights.

“The legal agency fulfills all the legal obligations of an employment relationship with the employee”, Grafton recruitment manager Miroslava Chvojkova said. “It carries out social and health insurances and taxes and ensures that it has comparable wage and working conditions with the assigned employer”.

Amid shrinking unemployment and rising job vacancies and labor shortages, the number of work agencies have skyrocketed in recent years on the Czech market to facilitate the temporary hiring of workers for companies in need. A number of them, however, have used that situation to take advantage of individuals who are not familiar with the legislation and unaware of what they’re entitled to in terms of wages, bonuses, pensions and social benefits (sick and parental leaves, unemployment benefits, etc.). While employment agencies are, by law, not allowed to take commissions, many of these “grey agencies” often do.

The Czech Republic’s booming economy has come hand-in-hand with a surge in underground employment agencies, facilitating the hiring of illegal workers in the country. Illegally employed workers may account for a quarter of a million people in total, according to official estimates, and can mainly be found in the construction and manufacturing sector. “As for illegal workers, those from outside the EU cannot be hired through an agency. Since 2012, it is illegal to hire temporary workers from non-EU countries who otherwise require a work permit. But this is exactly often the case with businesses acting like agencies operating on the Czech market”, Radovan Burkovic, head of the Association of Employment Agencies, recently explained during a television interview.

“The lack of workers is critical. Some companies resort to employing foreigners without the necessary documents out of despair. The consequences can be very serious though, beginning with the reputational risk up to financial sanctions”, Czech confederation of industry vice-president Milena Jaburkova told local daily Hospodarske noviny. Over 3.000 illegal workers were expelled from the country last year, with figures expected to grow this year. Labor shortages and lengthy procedures for non-EU nationals – including Ukrainians, Moldavians, Vietnamese, etc. – to obtain work permits are often cited as the main reasons behind this trend. Many Ukrainian workers, for instance, come to find work in the Czech Republic with a Polish visa.

Others, however, reject that explanation. “The lack of people is an excuse”, head of the Czech confederation of trade unions Josef Stredula argued. “We speak particularly about people who are being lured from countries where there is a low cost of work”, he continued, considering that with higher wages, Czech companies would be able to attract more legal workers from other EU member states and neighboring Central European countries like Poland, Slovakia or Hungary.

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