Unemployment climbs to 3.4 percent in January

Unemployment in the Czech Republic rose to 4.3 percent in January, up from 4 percent in December, according to data released by the Czech Labour Office on Friday. A month-on-month increase was recorded in all 77 of the country’s districts in January, with regional labour offices registering 309,000 people out of work, an increase of about 17,000 month-on-month.  

The rise in unemployment is ascribed to a combination of the restrictive measures in place and the end of seasonal work and fixed-term contracts which traditionally drive-up the number of jobless at the start of the year.

Analysts say that the slight increase does not reflect the real situation, since the labour market is paralyzed by the government’s Antivirus aid program, which prevents market mechanisms coming into force, with lay-offs and the transfer of employees to long-term sustainable job positions.  Štěpán Křeček, Chief Economist at BH Securities, notes that thanks to government aid packages there have been no mass layoffs in the Czech Republic so far, but some positions are “dormant” and have survived only thanks to state support.

What partly contributed to the rise in unemployment is the decision of some self-employed people to close their business. This concerns areas of business hardest hit by the pandemic, such as services, hospitality, spas, culture, sales or leisure activities, including mountain resorts, "says Viktor Najmon, Director General of the Labour Office of the Czech Republic.

In many of these areas the situation has now reached a critical point and unless state support increases, companies will no longer be able to hold employees. At the same time, a revival of the economy cannot be expected until the inoculation of a considerable part of the population is completed, and this may not be until the end of the summer, says Radovan Hauk from the consulting company Moore Czech Republic. Their estimate is that unemployment in the Czech Republic will climb to six percent by the end of the year.