Czech workers are better at foreign languages than other nations
Over the past few years, the Czech Republic has attracted record volumes of foreign investment, becoming a leader in central and Eastern Europe in this respect. The main attractions of the country are its strategic geographic location, a generous investment incentive programme, and last but not least, a relatively cheap but highly qualified and skilled labour. But has not cheap and skilled labour become a journalist cliché, especially concerning the much needed language skills, an area heavily neglected by the former Communist regime?
One of the investors who came to the Czech Republic in the early days of its transition to a free market economy is Accenture, a global management and technology organization providing services in strategic and information consulting, systems integration and change management in 47 countries around the world. It employs 200 professionals in the consulting business in the Czech Republic, and about a year ago the company started a new operation focusing on outsourcing. Many of its clients here in the Czech Republic are multinational companies or Czech companies with a foreign element present.
I spoke to Jamie Falcao, a partner at Accenture, and asked him first whether he thought Czech labour was really so skilled and cheap to be the driving force behind the massive influx of foreign direct investment to the country:
"It is definitely true about the skilled labour; I suppose it is also true about cheap labour, although I dont believe that strong investors make their decisions based on cheap labour. I think they make their decisions based on the effective cost of labour. I think everybody understands that labour that is today cheaper in the Czech Republic than in other countries in Europe will not remain like that in the future as this country becomes more closely tight together with European Union countries. I do believe that investors come to the Czech Republic because they feel there is a very good balance between skills and the cost of labour and that this is going to be maintained in the future; and the position of the Czech Republic in the centre of Europe is also very important for investors."
Your clients here in the Czech Republic include businesses from many different sectors telecommunications, financing, automotive, utilities, consumer goods, to mention just a few. Many of them are multinational corporations or Czech companies with foreign capital. The workforce therefore needs substantial language skills. What is the situation like? Are Czech workers able to communicate in foreign languages?
"Yes, very much so. I think the situation in the Czech Republic is not different today than in other countries ion Europe. I think English is almost a commodity now with young people, maybe not in people who are older above forty but people who are now in business, who are starting their careers or in the middle of their careers, for sure English is not problems for them. It is easy to get people who are fluent in German but other languages are also available in the Czech Republic, because it is very cosmopolitan and it is in the heart of Europe. We have developed a significant operation around the outsourcing business of Accenture in Prague and over a period from one year ago until now we have hired 200 people in Prague, all of these people speak at least one foreign language because they are working for other countries. And although, of course, depending on the language it is more or less difficult to get these people, the fact is that we are working from Prague to seven other countries in Europe providing services, and these people have the right skills, the right capabilities to do this work."
Your company came to the Czech Republic in 1991, was the situation different back then?
"For sure, the environment has changed significantly. I would say that the market for the services we provide is much more mature, much more stable. I think that the investors that have come to the Czech Republic and build their business here with foreigners have now consolidated their operations, so in the management, in some cases they still have expatriates in the Czech Republic, but most of the middle management in all multinationals is Czech now. I do believe that the economy, the business environment in the Czech Republic is much more stable, it is becoming much more mature, and that is good news for companies like ours, that really want to build a sustainable business and growing as the economy grows, so for companies that are targeting this country, the economy is much more developed."
Your clients are scattered all around the Czech Republic. Have you noticed any differences among different regions as far as language skills are concerned?
"Yes. I think in Prague you can find more diversity of language capabilities. But I believe even in smaller towns around the Czech Republic or everywhere in the country basic foreign language like English is now normally taught at schools, so it is becoming a commodity that everybody speaks at least English. Of course, the level of experience differs, but one thing I personally think that basic education of Czechs is very high compared to other countries in Europe. And this is not just by my sensitivity; as we were growing our business on outsourcing, one of the reasons we came to the Czech Republic was the fact that based on the analysis we did, the level of language capabilities of Czechs compared to language capabilities of people in other countries is higher on average today, so thats good news."
Are you talking about Europe as a whole or just central and Eastern Europe?
"I am talking about countries at a similar stage of development. If you compare for instance the Czech Republic and Ireland today, the level of skills in foreign languages of course, foreign language here means other than Czech, while in Ireland other than English the skills are stronger and diversity is also stronger. I think it is part of the cultural heritage of the Czech Republic, being in the centre of Europe. But definitely, the language barrier in the Czech Republic is not significant or bigger than in any other country in Europe."
Many of the foreign investors who come to the Czech Republic are manufacturers - contract manufacturers or production facilities. Do you think it is sustainable? Or what is the future for the Czech Republic as a target country for foreign investors?
"The Czech Republic has to evolve. The first question you asked me was about cheap labour in the Czech Republic. I think manufacturing companies or companies that have a strong manufacturing component will always look for cheaper-labour locations to produce. This is a trend we have been observing since the beginning of the century when a lot of manufacturing effort has been dislocated to other parts of Europe from the most developed countries and this is a trend that will go on. So, at this moment, the Czech Republic is attractive by its labour cost. But for the pure manufacturing companies, [staying here] will not be sustainable in the future and there will be more attractive countries where this manufacturing will be possible to be done. I think the Czech Republic with its strategic location in the heart of Europe should evolve rapidly to create a service economy that will be based on manufacturing structure, but positioning itself as added-value on top of the manufacturing, so that it becomes much more attractive for the long-term positioning of these companies. I think CzechInvest is focusing on that and I hope that this will be a continuous process to attract to the Czech Republic more services, becoming a third-generation country with economy based on added-value through services, even if maintaining a strong manufacturing basis because it is also the history. The Czech Republic has always been a very good, very solid country in manufacturing and it is very important in the new economy that the services component becomes at least as important as manufacturing basis so that the growth of the country is sustainable in the future."