Unemployment in the Czech Republic has reached a point of stagnation, reflecting a dynamic shift in the labor market. Petr Dufek, Chief Economist of Banka Creditas, notes a significant transition of workers from the industrial sector to the service sector, contributing to a unique landscape.

As of the end of December, the number of unemployed individuals exceeded job vacancies for only the second time in five years. With nearly 280,000 people unemployed and only 272,000 job vacancies available, two primary factors contribute to this scenario. Seasonal changes typically lead to a slight increase in unemployment towards the year-end. Simultaneously, a decrease in job vacancies is observed, partly due to immediate filling by individuals who lost their jobs and partly attributed to companies eliminating positions amid economic challenges.

While the national unemployment rate remains low at 3.7%, specific regions like Karvina experience an 8.2% unemployment rate, and Bruntal and Most have rates close to seven percent. These areas, previously dominated by heavy industry and mining, witness a slower economic structural shift.

The mild increase in unemployment from November, coupled with year-on-year stagnation, may appear uneventful on the surface. However, detailed statistics reveal a noteworthy trend—individuals are shifting sectors, notably from industry to services. While this transformation might not be immediately evident in unemployment data, it signifies a change in employment structures.

The economic structure in regions such as northern Moravia, northern Bohemia, and southern Moravia has frozen, with limited business development and minimal influx of major investors. Consequently, young people often seek employment opportunities elsewhere. Despite anticipated economic recovery, the unemployment rate is expected to remain below four percent in the coming year, driven by continued pressure on industrial companies. The evolving job market dynamics highlight the need for strategic measures to address economic disparities across regions and foster diversified growth.

Article by Prague Forum