Automobile production – illustrative photo.
Prague – Labor productivity in the Czech Republic has increased by 84.6 percent since the division of Czechoslovakia. With the exception of the years 1997, 2008, 2009, 2016, it always increased year-on-year, the average annual increase was 2.4 percent. This follows from the analysis provided to ČTK by the Chamber of Commerce of the Czech Republic. According to the chamber, however, Czech labor productivity still does not reach the European average. To increase it, domestic companies need to focus on innovation and production with high added value.
Labor productivity expresses gross domestic product calculated per hour worked. In the past 30 years, it has mostly grown year-on-year, the most in 2001, when it increased by 7.7 percent. The Czech Republic has recorded a drop in labor productivity only four times, the deepest was by 2.3 percent during the financial crisis in 2009.
Of the Visegrad countries (Czech Republic, Slovakia, Poland, Hungary), the Czech Republic had the best initial position in terms of labor productivity in the early 1990s. In 2010, however, Slovakia overtook him. “The Czech Republic had the highest labor productivity of the V4 countries in the 1990s and maintained it until the economic crisis in 2009. After that, however, Slovakia accelerated its growth and overtook not only Hungary, but also the Czech Republic,” said Vladimír, president of the Chamber of Commerce Long. Currently, according to him, labor productivity is growing rapidly in Poland, which in 2016 overtook Hungary and is approaching the Czech Republic.
Czech labor productivity is approaching Western countries, but has not yet reached the European Union average. According to the Chamber of Commerce, this is also the reason why the wages of Czech employees do not reach the average wages in Germany or Austria. In order to improve the development of labor productivity, and consequently to improve the performance of the economy as a whole, according to the chamber, the key is a transition to economic activities with higher added value.
“If we want people to have a higher standard of living and their wages to rise more and in real terms, i.e. after adjusting for inflation, labor productivity must increase. This can be achieved by companies investing in more powerful machines, focusing on innovation and production with high added value, but also by changing the organization of work,” said Dlouhý. He also pointed out that the unproductive agenda, which companies must devote to administrative burdens, also contributes to lower work productivity.