After five years, there are more people without jobs than vacancies, unemployment is 3.9 percent

Unemployment in the Czech Republic, share of unemployed persons aged 15-64 in percentage

Prague – For the first time in almost five years, there were more unemployed people in the Czech Republic than job vacancies in January. According to the data published today by the Labor Office of the Czech Republic (ÚP ČR), 283,059 people were without work, unemployment rose to 3.9 percent from December's 3.7 percent. Employers offered 281,141 vacancies in January. According to experts, the increase in unemployment at the beginning of the year due to the end of seasonal work is usual, but in the following months, due to the economic situation, the number of people without work will increase. According to Viktor Najmon, Director General of the ÚP CR, unemployment could stagnate and even decrease with the arrival of spring and the start of seasonal work.

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The number of vacancies decreased by roughly 7,500 in January compared to the end of last year. According to Najmon, this year employers are more cautious in hiring people and, due to more expensive energy and raw materials, they are also focusing on more efficient creation of financial reserves. However, the share of the unemployed is still relatively low, the director said.

According to analysts, the energy crisis, the cooling of the Czech economy and the associated business uncertainty have not yet had much effect on the labor market. For example, the president of the Chamber of Commerce, Vladimír Dlouhý, believes that unemployment could remain low in the coming months as well. “Even though companies are facing an increase in costs, the good news for employees is that more than four-fifths of employers are not going to give notice in the next six months. Every seventh company will hire additional employees,” said Dlouhý, referring to the results of a survey conducted by the Chamber among by its members.

The worst employment situation in January remained in the Ústí Region, where 5.8 percent of people were without work. The Moravian-Silesian Region followed with an unemployment rate of 5.2 percent. “These regions had the highest share of unemployed people last year as well. This corresponds to their long-term economic situation,” the Labor Office said. Together with Prague, three regions, Plzeňský, Pardubický and Zlínský, showed the lowest unemployment in January, where it was 3.1 percent.

According to the analysts of Akcenta Miroslav Novák and Trinity Bank Lukáš Kovanda, unemployment in the Czech Republic will reach over four percent this year. “The positive thing in this direction is that there is no indication yet that there should be a sharp increase in unemployment and a dramatic decrease in job vacancies, as was the case after the financial crisis in 2008,” said Novák. According to analyst Jana Stecker, Komerční banka anticipates a slight increase in the number of unemployed, on average it should reach 3.9 percent this year. Generali Investments analyst Radomír Jáč is more optimistic in this regard, expecting an average of around 3.7 percent this year.

“The domestic labor market has been overheated for a long time, and companies have had a problem finding suitable employees for more than a year, across regions and fields. The increase in unemployment could partially relieve this pressure, and thus enable the labor market to be cleaned up,” says Citfin's chief analyst Tomáš Volf. Vladimír Pikora, chief economist of Comfort Finance Group, also pointed out the positive effect of the increase in unemployment. According to him, it is neither normal nor healthy when there are more vacancies than available people, because the employer cannot choose between job applicants, and the pressure to increase wages increases, which reduces competitiveness.

Many analysts see only a decrease in vacancies as the only more noticeable change in the labor market. According to the chief economist of UniCredit Bank Pavel Sobíšek, the employment of Ukrainian refugees probably had the greatest influence on this. The Labor Office stated that at the end of January, 94,383 Ukrainians with temporary protection were working in the Czech Republic, mostly women. Ukrainians most often work as laborers or helpers in construction, manufacturing and transport. According to Pikora, these professions are now among the most in demand, and many of them require a basic education. “Here you can see that we are the assembly plant and warehouse of Europe. Higher education is not valued here. We are a simple economy,” stated Pikora. data of the JenPráce.cz website by half. In January, 91.2 percent of the jobs offered through this website were full-time, 8.8 percent were one-time or short-term support jobs. Last January, the share of part-time jobs offered was 15.5 percent.

Development of unemployment in the Czech Republic:

Source: ÚP CR