During the Economic Lunch Briefing Event, organized by the Italian-Czech Chamber of Commerce on 19 October 2021, with the presence of renowned economists, the macro-economic updates of the Czech Republic have been deepened, such as the impact of recent monetary decisions and prospective expectations in a European vision. In particular, the question of the labour market in the Czech Republic has been raised. Pavel Sobíšek, the chief economist at Unicredit, explained the economic particularity present in the Czech Republic, namely that of the low unemployment rate.
MACRO-ECONOMIC OVERVIEW OF THE CZECH REPUBLIC: Sound GDP prospects thanks to the post-November-19 recovery
The GDP outlook for Europe is sound as a result of the recovery from past pandemic losses. By 2022, GDP growth is expected in most EU countries, well above historical averages. Countries with deeper losses expect faster growth, while the Czech Republic expects weaker growth than the eurozone. The Czech Republic’s gross domestic product (GDP) was worth USD 243.53 billion in 2020, according to official World Bank figures, and represents 0.22 per cent of the world economy. The GDP of the Czech Republic is expected to reach $ 230.00 billion by the end of 2021, according to the global macro models of Trading Economics and the expectations of analysts. In the long term, according to our econometric models, GDP in the Czech Republic is expected to be around USD 243.00 billion in 2022. Czech GDP is below European levels for two main reasons, the first linked to problems in the automotive sector (10% GDP), and the second linked to the slow return of tourism.
THE LABOUR MARKET
The Czech Republic is the country with the lowest unemployment rate in the EU. The labour market is almost unique in that there are more vacancies than unemployed people. The share of unemployed persons by job vacancy of 0,7 % is only comparable with Japan. The pandemic certainly did not help the situation on the labour market, because the structural problem of the number of job vacancies has reached its all-time high. There is also a mismatch between labour supply and demand, which means that some unemployed workers are unable to find work because they do not have the skills sought by companies. To solve this problem there was not implement any government actions. The number of foreign workers in the Czech Republic is constantly increasing. Over 700,000 foreigners are registered to work in the Czech Republic, while EU citizens still dominate among foreign workers, the increases have been higher for non-EU workers lately. Two-thirds of non-EU workers come from Ukraine, a number of the economic sector that could not exist without these workers.
SLOW PRODUCTIVITY GROWTH: investing in assets
The other problem with the labour market is slow productivity growth. The pandemic has slowed down the already poor productivity, which appears to be growing, referring to the gap between hourly productivity and productivity per worker. Part of working time may be permanently lost by structural changes in the labour market. The current system may lose this growth because, as already indicated, there are more vacancies than unemployed people, and there is a lack of opportunity to increase the productivity of workers for the fear of losing company resources. One way to increase productivity is to invest in ASSETS, this type of strategy was not developed during the pandemic since in times of uncertainty it is considered at high risk. But now that GDP is growing, the ability to invest in assets has become a profitable choice that could aim to increase corporate productivity in the long run.
Source: http://www.camic.cz
