Czech companies face jobs skills mismatch as shortages become acute

Job and skills shortages are a topic on the tongues of most Czech businessmen and women at the moment. The figures speak for themselves: almost as many job seekers as vacancies. But there is a clear mismatch between the skills offered by the jobless and the demands of the jobs on offer.

Illustrative photo: CTK

Hays is an international recruitment company that’s been operating in the Czech Republic for 20 years. And it specialises in some of the specialist areas where the job shortages are at the most acute in the Czech Republic right now. Ladislav Kučera is managing director of the Czech branch. And he explained first of all how unique the situation on the Czech jobs market is right now.

ʺAt this moment we have something above 215,000-220,000 open jobs in the Czech Republic. For the record, we have never had that since the Velvet Revolution, since the communist time when everyone had jobs. So it’s a very unique situation. It’s a candidate driven market at this moment. So we really switched after the recession and the switch was very fast. That was also very unique because from 2014-2017 we saw a rise of around 150,000 plus in open jobs within three years. That is really, really fast. At this moment we are in the situation where there is an active hunt from the employer for employees and it’s no longer a matching system - job opening and a suitable candidate – but it’s more about candidate attraction.ʺ

In that case, employers have to go out of their way to find the right people… or maybe just to find any people because they can’t get the right people any more. How much pressure is on them to boost wages and boost all the other incentives and benefits around?

ʺIn some of the situations the candidates can just use the market to price themselves in the current position.ʺ

ʺYou asked it in the first question and I did not answer. Actually since 2017 – in 2016 the pay rise was slow – it [wage rises] have been very significant throughout the segments. There was actually no segment which actually stagnated a lot. Most of the wage rises that we have seen are around 10 percent and above. When we are talking about personnel or employees who are employed already and are changing employers or are in the way of thinking about a change, there we might even be seeing more than 15 to 20 percent wage rises from the current job to the potential future one. So that’s really a big change to the market as we know it and also to the candidates’ internal recognition itself. Candidates start to be a little bit more flexible and they are not so conservative as they used to be. Before it used to be, I have a job I have security and this is a good place and there has to be a very interesting offer before I will consider [a move]. At this moment, candidates or somebody who would be willing and open to see themselves on the workplace or the work market are a little bit more bolder and are open to offer themselves for new opportunities even without knowing what that opportunity will be.ʺ

That boldness is an expression of the whole market situation where they are not even taking a risk and can look around test the market, see what’s happening, without any real fear of the consequences…

Ladislav Kučera, photo: archive of Hays

ʺYes, exactly as you said. In some cases that could be market testing. It could be asking what is the appreciation in terms of the salary, benefits and everything on the market of the jobs that I am having at the moment and how am I graded with my current employer. In some of the situations the candidates can just use the market to price themselves in the current position. It is not happening really a lot but in some cases it is. More often it is: I have been in a job, the market situation is good and there are offers. So let’s try where I can move myself.’ʺ

Let’s look at it from the employers’ point of view. In many sectors of the Czech economy there are shortages. Okay, there are unemployed people but they often don’t have the skills to match the jobs, which is one of the major problems. So how much is it a problem now and how much will they have to face it in future years to get new people or just to hold onto the people they have?

ʺI would say it’s a big challenge but we have to divide it into two parts. If we take the short term, it’s a very big problem. In the long run, it might be a challenge for them to be innovative and bring in automation in some processes where manpower is not needed or there are no more people working in those positions that are at the lower end of the pay scale. So, a machine-robot would be taking the place of a person and the human capital will actually increase a little bit.

ʺBut in the short term, it’s a really big problem. Our economy is pretty much dependent and we are an export economy. If the employer in the Czech Republic is in a chain of suppliers and cannot supply a part of something that is being assembled at the final destination, that might be a big challenge to employers or investors here. And they have to be really flexible in the way of attracting the right talent because there is a shortage.

ʺSo at this moment we are not actually that open to talent.ʺ

ʺAnd our political situation is not really pro-flexible if I am able to say that. Now with the current hysteria about the word immigration, which is nothing bad about it but our politicians just used it for their political campaigns and twisted it out into something that is totally nonsense. So at this moment we are not actually that open to talent and I am not saying unskilled labour but talent in technologies, that could be an IT engineers, a software developer, anybody from a quality check to process and process engineers coming into the country, which is fairly industrialised, and we don’t have the talent. Simply and literally, if we go with economic growth and businesses growing as they have so far, we don’t have enough people actually to service those jobs in the Czech Republic. And also, on the other hand, we don’t have enough engineering degrees and skilled and technically educated candidates that would be able to fill all these open jobs.ʺ

Where do you see the problems as being the most serious at the moment and going forward will they continue to be the problem areas?

Illustrative photo: Ordercrazy, CC0 1.0

ʺFrom our perspective, because we are dealing with specialist recruitment, it would be technologists. It [the problem] has been here for a while but the need is now really accelerating. Even is saying that and I can only confirm it. It is also IT technologists, not that I am talking about really big data security, but development as a whole. Anything that has to do with coding, anything that has to do with programming, there’s a huge shortage actually in the majority of the languages that are being coded. So that’s the biggest shortage. And with the way of life that we are used to now, and it’s changing everywhere, that if you look around yourself most of the things that we interact with has a microchip in it and if they don’t have it they will have it tomorrow. There needs to be some kind of code and at a service level taken out from those microchips as they try to have some kind of Internet of Things (IOT) applications. They try to make those fridges, toasters, or something that you would operate from a very dumb thing to something smarter things that can be self- operated and can predict. But that has to be developed somewhere, the software has to be written somewhere, it has to be serviced somewhere. And I see the gap increasing more and more. The schooling and educational system is not changing in a way as to cope with the fast change in the world of work that we are experiencing.ʺ

You mentioned automation, how fast or adequately is that coming into some sectors? I read a while back that there was a problem because there weren’t the developers to develop the robots to replace the people in some of these jobs.

ʺIn 20 years there is not really going to be an employer-employee relationship.ʺ

ʺYes, it’s connected. But I think that our situation in the Czech Republic could speed it up. On the contrary, it could have a positive effect in a way of having automation coming in a bit faster than was originally planned. Also, what we have to think about is that the majority of investments of the employers in the Czech Republic aren’t based on Czech capital. They have a mother company and it has been established from abroad. We have to understand that we are not really in control here locally when it is going to happen and it has to make financial and economic sense. We can see it starting, slowly but surely, in the environments where we would not think it would happen in the next five years. At this moment, if the investor is here to stay and the investment has been big enough or profitable, then I would say the change will be in the next two, three, or five years. We will really have to see that change to automation. The talent mismatch, even though there might be a slight rise in unemployment, is something we will be battling as well as Western Europe.ʺ

In what way do you think the overall relationship between employers and employees is likely to change in the next three, five, 10 years? It’s likely to be a lot more flexible system and you are not maybe going to have one employer?

Illustrative photo: Office of Czech Government

ʺWe as Hays are in 33 countries and have run questionnaires or studies where we have asked business leaders various things about how they see the future of their businesses or the business environment in 20 plus years. One of the most common things that came out in the relation between employer and employees is that the organisations actually have to prepare themselves to be an organisation of the future, meaning that would actually have to be a lot more flexible in the way they actually employ or interact with future know-how holders. Ina way, what we predict, I could be wrong, is that in 20 years there is not really going to be an employer-employee relationship but more a sort of freelancer working on a project for a certain brand or a certain company that would actually have a project based business.

ʺI can see it a lot faster in the western part of the world because in the Czech Republic we are very rigid in the ways how we are used to do stuff. We are not really that flexible in moving and following the jobs. We don’t really do that, we are stuck in our own ground and also in the way of having jobs for an unlimited period. This [mentality] is also something that exists although everything can end sometime. We have to see for the next generations coming out of the schools and see the work-life balance become more of a theme than at this moment. It will come out that freelancing and being your own boss in the way of supporting and servicing your own projects with your know-how and learning with it will be much more in place. But I should add, in order to do that we will have to have very flexible legislation which at this moment we don’t have. And it’s something that might slow us down in the years to come because if you don’t have the ground prepared you can’t really evolve as fast as the market.ʺ