Find out more about the labour market

Excellent human resources, a central location, a stable political and economic environment and safety are the main reasons that foreign investors frequently choose the Czech Republic as the country in which to implement their investments. However, the labour market in the Czech Republic is facing an ongoing shortage of candidates and a pressure on salaries growth despite the fact that salaries keep rising across regions and positions and after two and a quarter years of decline real salaries started to grow again.

Whether this concerns R&D centres, ICT companies, business services centres and manufacturing enterprises, the Czech Republic has an indisputable advantage thanks to its central location, advanced infrastructure, high quality of university education, excellent quality of life and high level of safety. The good news for investors considering locating their business activities in Central Europe is the fact that the Czech Republic and other countries here demonstrate long-term political and legislative stability, which is why this part of the world is slowly becoming a synonym for nearshoring.

Human resources

Human resources are the key aspect of every successful business project. Labour costs are not the only issue to be addressed; access to workers and, in the case of investments based on intellectual activities, the educational level, language skills and so-called soft skills of potential employees are also important. It is apparent that Czechs possess these skills and traits in abundance, as they are very adaptable and compatible with a number of cultures. This is also why the country is able to attract many foreign talents. The number of foreign workers in the Czech Republic has increased by almost 30,700 in the last year, bringing the total number of foreign workers to over 823,900. This represents a growth of approximately 2.5 times the figure recorded at the end of 2015.

Labour market

However, the hunger for candidates on the Czech market persists, both for blue-collar and skilled positions. Unfortunately, even the negligible increase in unemployment has not helped the labour market and that companies are still struggling with a shortage of employees. The intricate and lengthy cross-border recruitment from outside the EU and the inadequate economic migration rules are also contributing factors. Thanks to loudly articulated needs, the government is luckily slowly moving this issue forward. The option of free entry to the labour market for candidates from nine selected countries represents a favourable development in the recruitment process. As of 1 July, this year, citizens of the USA, Great Britain, Canada, Australia, New Zealand, Japan, South Korea, Israel and Singapore can to commence employment with Czech companies without the need for additional paperwork. This development is welcomed by employers, particularly those seeking to recruit skilled individuals, as it will significantly streamline the hiring process and enable them to fill crucial roles more expeditiously.

The recently approved Indonesia labour migration project is also a positive initiative for employers in manufacturing and industry, as it will enable them to attract Indonesian graduates from polytechnics with the requisite skills. The project will allow 1,000 Indonesian skilled job seekers to enter the Czech labour market each year. But it is still not enough, and the employers keep calling for introduction of a comprehensive economic migration strategy.

Future developments will continue to be influenced by the performance of Czech economy, shortage of candidates that has caused the rising employee turnover and the changing needs of employers caused by higher level of automation and digitalization and their focus on ESG and sustainability.

For the next period, we expect the unemployment rate to fluctuate at the level of 3,8% and salaries to grow by 5-10% in almost all sectors. The Czech Republic is a strong industrial country with evolving high value-added digital sectors. We are sure it will keep its position and competitiveness within Central Europe. 

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Source: Grafton Recruitment, 2024