The Czech unemployment rate fell to a 21 year low of 2.8% in October, breaking the previous record low of 2.9% reported in June, the Czech Labour Office reported on November 8. There were 215,622 jobless people, down by 3.9% m/m, the lowest figure since 1997.
“The unemployment rate, according to our estimates, has reached the minimum for this year and should start growing again in the coming months. The main reason will be closing of seasonal work in both agriculture and construction,” said Raiffeisenbank analyst Frantisek Taborsky.
“According to our forecast, this year's average unemployment rate will reach 3.2%, and next year we expect a slight increase to 3.3%,” Taborsky added. On the contrary, CSOB analyst Petr Dufek expects the unemployment rate to stay just under 3% next year, as it has virtually no room to further decrease.
The chronic labour shortages continue, with the number of vacant jobs in October reaching 316,884, down by 0.2% m/m. The lowest October unemployment rate 1.8% was recorded in the Pardubice Region (Eastern Bohemia), followed by the South Bohemian and Plzen regions with 1.9% and Prague with 2%.
According to the Labour Office general director Katerina Sadilkova, the positive numbers show that Czech labour offices have managed to find jobs even for people who have lost motivation or have been unwilling to work.
Labour shortages, according to ING's chief economist Jakub Seidler, motivates employers to look for alternative solutions, such as part-time jobs. “According to the Czech Statistical Office, the number of employees working less than full-time hours increased by 20,000 y/y in 2Q18, most of them at the age of 65 or at the age of 25-29,” he said.
The chief economist of the Czech Fund, Lukas Kovanda, also pointed out for the CNA that based on current data, the Czech Republic has the lowest unemployment rate not only among the European Union countries but also within the OECD, which is comparable only to Japan (2.4%) or Iceland (2.9%).
Labour shortages are already acting as a drag on economic growth and forces companies on the Czech market to consider moving to a different country.