Czech Republic: Economic recovery won’t reduce joblessnes substantially

In general, the unemployment rate in the Czech Republic will stay at the same percentage level as in 2013. The Czech Statistical Office (ČSÚ) published, on Tuesday 3rd June, the seasonally adjusted data on unemployment rates. In April 2014, this economic indicator decreased interannually by 0,6 percent, and so the national jobless total is now just under 600,000. The unpleasant aspect is that this will not be going down any time soon. The harsh economic facts are that whatever the good news on GDP, inflation, and manufacturing output are, it will take time to convert them into new jobs and lower unemployment. Just as employers cut overtime and temporary jobs when times get hard, they usually boost overtime, but make do with the existing workforce when there are signs of an upturn.

That’s one reason why Czech economy fortune-tellers expect the rate of unemployment to stand at the same 8,2 percent level at the end of 2014 as it was 12 months earlier, even though it is believed that the economic recovery is underway. The brokerage does not expect any real improvement in the jobs figures until the start of 2015. According to one school of economic theory, it takes three percentage points of improvement in economic productivity to result in a single percentage drop as for the unemployment rate. Some economists see the ratio a little more optimistically as 2:1.

 

The upturn in employment is envisaged to be more rapid in the most open and less regulated economies where employers have fewer fears of hiring people. European economies, including the Czech one, are not usually put into that bracket.