Economist: rigidity and outdated policies stifle Czechia's labor market
Labor market conditions in Czechia have deteriorated for the third consecutive year and are now ranked as the tenth worst in the EU, primarily due to low flexibility and significant gender pay disparities. Despite having the lowest unemployment rate in the EU, Czechia is struggling to create favorable conditions for workers. I spoke to Lukáš Kovanda, Chief Economist at Trinity Bank, to find out what is contributing to the worsening labor market conditions.
Can you comment on the factors affecting Czechia’s labor market and if there are others that stand out?
“There is quite a long-term problem with low flexibility of the Czech labor market for objective reasons, such as our high dependency on manufacturing and industrial production. It’s more difficult to introduce part-time work arrangements within manufacturing or industrial production than within the service sector.
“So, partly it’s because of objective reasons. Partly, it’s because of nearly nonexistent political will to change the situation even though economists, analysts, and sociologists have strongly recommended for years to make the job market regulation more flexible, to open it more to part-time jobs, especially with regard to women, underrepresentation in the labor market.
“I still don't see enough improvement in this regard. So, maybe there will be a need to put more pressure on politicians to really do something.”
You attribute that largely to the labor market being reliant on industrial manufacturing, but what really is it about part-time work in Czechia? Do you think that’s more about the nature of the labor market here?
“The problem is twofold I would say. The first thing is that manufacturing is typically a shift work arrangement which is the legacy of history from as far as the 19th century.
“It’s also been incorporated in the minds of people over the years in other sectors when it would be easier to introduce some more flexible arrangements.
“There are mental obstacles to this, however. Many employers are reluctant to provide or open positions for part-time arrangements simply because they don’t see it as helpful for them.
“The legislature does not provide strong incentives for employers to open these part-time positions.”
In this case, the problem would be lack of regulation rather than vice versa, that maybe if there would be some top-down pressure, it would be better for workers?
“The problem is that the regulation does not reflect the conditions of the 21st century and the needed changes in the labor market. This is my main problem. The regulation is still for the 20th century.”
