Labour shortage once again on agenda as government looks abroad

The financial daily Hospodarske noviny carries a long article on Tuesday about the problem of labour shortages in the Czech Republic, the latest coverage of a much-discussed issue in this country. The estimates are gloomy, and the government's attempts to counter the problem don't seem to be bearing much fruit. But is the situation really that bad, and will fresh attempts to attract foreign employees work?

Listen to the doom-mongers and you'd be forgiven for thinking the Czech economy is on the verge of grinding to a halt because of a shortage of labour. The Labour and Social Affairs Ministry estimates there are currently some 50,000 unfilled vacancies for skilled workers in the Czech Republic, and predicts that in 25 years, the figure will have risen to 400,000.

Hospodarske noviny quotes a study by a Dutch research agency called SEO, which makes the startling claim that by 2050, the Czech economy will be lacking some 1.5 million workers. But how accurate are these predictions? Daniel Munich is a labour market specialist for the research institute CERGE:

"It's very difficult to disentangle actual demand from existing statistics, because the statistics are strongly dependent on the willingness of institutions and companies to report to public institutions. So these estimates are rather questionable, but based on various indications, there really is a shortage of skilled labour in the Czech Republic and something should be done."

The biggest problem seems to be in the engineering sector, where mechanics, welders and machine repairers are in great demand. There is also a much-publicised need for doctors, architects and civil engineers. So what explains the shortages? Daniel Munich again:

"First, the Czech economy is growing at a relatively high rate. New companies are coming from abroad, local successful companies are growing, and at the same time we inherited from the communist past an extraordinary low share of highly-skilled population, given the low supply of tertiary education. So taken together, this creates our current situation."

Previous attempts to attract foreign labour to fill the shortfall appear to have achieved little. The previous Social Democrat-led administration launched a scheme to attract qualified workers from countries such as Bulgaria and Croatia. That scheme, says Hospodarske noviny, seems to have been an unqualified failure. Of the 600 people who took part, just 30 were "new" arrivals. The remainder were people already living here who saw the scheme as a way of speeding up the process of gaining permanent residence.

Now the centre-right cabinet wants to loosen up the residence and work permit regulations even further in a bid to attract more skilled workers from abroad. Daniel Munich says that can only be a good thing:

Photo: European Commission
"The system, as it was and still is here, is quite complicated and quite unfriendly to these highly-skilled people who have many other options with regard to work. So if we don't change this system, we would be losing this valuable asset of human capital, which was financed by somebody else - in this case by other countries, and it's a smart government which makes it easier."

So putting a friendly face on the process of applying for a residence permit - issued by the dreaded foreigners' police - will, says Daniel Munich certainly help. But some analysts believe the Czech Republic has a bigger problem. They point out there is little motivation for skilled labourers to settle here, when they could choose other countries further west, where wages are higher and the bureaucracy more friendly to foreigners.