29th November 2016

HR experts on workforce shortage in the Czech Republic - opinions, data, possible solutions

Czech Vice-PM for Research, Development and Innovation Pavel Bělobrádek, said earlier in autumn that manufacturing has been experiencing growth, but the state of human resources in manufacturing is critical. 

Ladislav Kučera, Managing Director of Hays Czech Republic and Andrea Colantoni, Country Manager of Hudson give their insights:

The total number of available jobs by the end of 2015 was around 108,000, which when compared to the situation in January 2015 represents an increase by nearly 75%, says Ladislav Kučera of Hays Czech Republic. Demand for qualified candidates has also been growing. The low numbers of unemployed and many open positions have resulted in roles in certain segments becoming difficult to fill and in applicants for such positions having the option of choosing from three or more roles. This is the case,  for example, for candidates in IT, production and finance. 

Because of this situation, companies are now beginning to realise the importance and strength of brand marketing aimed at potential employees, and they are no longer focusing only on clients and end customers. Even despite the significant rise in the number of available jobs and hard to fill jobs companies have not yet resorted to significant wage increases. This still mostly applies to specific positions, in which specific knowledge or experience is required, rather than to sectors in general. Companies are attempting to attract job applicants with new benefits, the option of using modern technologies and attractive work environments, Ladislav Kučera adds.

In December 2015, Hays conducted a survey „SALARIES AND BENEFITS IN  2016“ among Czech companies and their employees, in which it asked organisations about their plans related to recruitment, wage policies and changes in benefits. When surveying employees, Hays focused on determining their willingness to change jobs during 2016, the motivation for such changes and their future expectations. A total of 400 companies and 1,500 potential job applicants were surveyed.

In the Czech Republic, we are seeing a chronic skills shortage across regions and industries, says Andrea Colantoni, Country Manager of Hudson. The second problem is the structure of the Czech economy. Simply put, the Added Value generated is too low. This must change as it is an indication that there is focus on cheap labor rather than knowledge intensive business. The companies operating in the Czech Republic must find a way to be more R&D -oriented, and also local manufacturers are far too dependent in being sub suppliers to large companies. 

Steps companies can take, according to Andrea Colantoni:
One mistake I see is to treat the whole company as a monolithic structure instead of an eco-system. What I mean is that I see companies that are so focused on costs, that they ignore the benefit of moving up the value chain. That means that when they need key people, they are far too rigid about cost structure, disregarding the fact that a) people will not move now unless they have to or get a lot more and b) people salaries are affected by supply and demand just like raw materials. In other words, companies have to build better compensation models to attract key people.

The role of the Government in all this
It’s the same old story:
1)    The education system must be reformed. There are far too few students in technical and engineering and IT fields, and far too many in areas where there is no shortages, like marketing and finance
2)    Also, the school system is too unregulated. There is a number of “Mickey Mouse” universities in the Czech Republic whose quality is very mediocre or worse and they keep attracting people to get a degree in something which is of dubious quality and relevance for our economy. 
3)    The government is so focused on keeping people employed that they encourage downward salary pressure by attracting low-cost jobs in factories and SSCs. The strategy has to be to move away from this and invest into R&D, and also to encourage local firms to not just be subcontractors but to also build real companies with own brands, products and sales.
4)    One could also argue that the Czech Republic should change its immigration policy, in the sense of having a fast track processing of applications for visas for qualified people who have skills that are needed. 


Besides structural issues, there is a wider context to be considered in the light of evolution and globalization. 
Guy Ryder of the International Labour Organisation said recently in an interview for the Czech Television that people worldwide have realised that their wages have frozen and they find it frustrating. Another source of frustration is the fact that many people, have realized that they will not be better off than their parents which also means they might not be able to secure the future and the standard of living for their children as their parents have secured for them. People currently think that politicians have no answers, solutions to these problems, Mr. Ryder said. The Czech Republic has the tools to restart wage growth, though. We need the global economy to grow so that we can concentrate on unemployment, he added.

Look at a recent report on Czech workforce by AmCham Czech Republic.

Click also on the recently published study by EY and EIG (Economic Innovation Group) The Millenial Economy that focuses on millennials, their (pessimistic) perceptions of (uncertain) future and possible impacts of their attitude to life and work on the economy. What will the next generation generate? Another topic for a broad debate is Industry 4.0 and its impact on the society. Is human actually a tool to be used by industry or is industry a tool to be used by human, or both? (Souvislosti J.Pokorného, a programme on the Czech Television)  These and other issues will influence the Czech labor market, workforce and its structure. 

Members of the American Chamber of Commerce in the Czech Republic