Unemployment nudges 10% though analysts say worst is over

New figures released by the government on Monday showed unemployment creeping up towards the dreaded 10 percent mark in January. The registered number of unemployed was 9.8 percent in January, the Labour and Social Affairs Ministry announced, up 3 percentage points year-on-year. However analysts say things won’t, at least, get much worse.

More than 570,000 people are now registered as looking for work in the Czech Republic, the worst figures since 2005. There are sharp variations across the country, of course, with the town of Jeseník in North Moravia recording unemployment of 19.2 percent, and the capital Prague traditionally low, with 3.8 percent.

Daniel Münich

Analysts say the traditional New Year jump in unemployment has been exacerbated by the particularly harsh winter; the plummeting temperatures have halted construction work and agriculture. Daniel Münich is a labour market expert for CERGE, the Center for Economic Research and Graduate Education of Charles University.

“It’s very common, even in the past, that firms release people at the end of the year and in January, the first week after Christmas and the end of the year, they register at their local Labour Office.”

It was often claimed that the Czech Republic had escaped the worst of the global economic crisis. Do these figures suggest that this is not in fact the case?

“I don’t think so. It’s true that the crisis came to the Czech Republic later than most European countries, but overall unemployment is still below the EU average. I’m much more optimistic about 2010, so I don’t think it’s a sign of some disaster.”

In other words you don’t think we’re going to see a rise above 10 percent this year.

At the employment office

“Well this winter has been very cold, and seasonal work in construction and other sectors has virtually stopped, and this prevents people finding jobs they usually have in construction etc. It might be that we reach 10 percent next month, but it won’t go much higher.”

The Czech economy, which relies heavily on exports, has suffered from reduced demand for its goods amid the global economic crisis. Analysts believe the situation will stabilise in the second and third quarters of 2010, although unemployment will remain at the 9-10 percent mark for some time to come.