Prague, Czech Republic – A study by Dutch financial conglomerate ING points out that unemployment in the Czech Republic, the single lowest in the EU, has probably “reached close to its lowest point” and is unlikely to further decline.
ING chief economic for the Czech Republic Jakub Seidler writes that “the share of unemployed people stagnated in August at 2.7% after hitting the current historic low of 2.6% in June and May”, a slight seasonal increase prompted by the arrival of recent graduates and employees from the education sector on the labour market.
Although the unemployment rate could slightly decrease in the coming months, it’s unlikely to significantly drop and has probably already reached its lowest point: amid an imminent slowdown of the global economy and flattening out of Czech GDP growth figures, “we assume the unemployment rate will bottom out this year”, writes ING.
Although many EU countries, including in Southern Europe, might look with envy at the staggering low unemployment rate in the Czech Republic, companies are struggling to fill open positions: the number of vacancies reached its new record in August, exceeding 350,000, highlights the study.
Despite early worries about the slowdown of the Czech economy, “the current slowdown in the global economy is transmitting into the Czech labour market more slowly than expected”, writes ING’s Jakub Seidler, “which is still evident by the solid wage growth exceeding 7%” in the second quarter of 2019.
Amid acute labour shortages hampering the growth and activity of many businesses operating in the Czech Republic, employers are increasingly forced to turn to foreign workforce to meet their labour needs, sometimes illegally.
In that regard and to ease the tensions of the domestic labour market, the Czech government recently increased the number of quotas and work permits to be delivered to workers from a number of countries, most notably from Ukraine.