Czech Republic: Latest working life developments – Q2 2016

A shortage of workers, proposals to recruit from abroad, union objections to cheap labour, restrictions on shop opening hours and the introduction of paternity leave are the main topics of interest in this article. This country update reports on the latest developments in working life in the Czech Republic in the second quarter of 2016.

Workforce shortages lead to disagreement between social partners

Czech companies have been struggling over the past few months with severe labour shortages, especially in the industrial and healthcare sectors. Companies are finding it increasingly difficult to keep up with the pace set by the economic recovery and are often forced to turn down new orders because of staff shortages.

The workforce shortage is occurring among both skilled and unskilled workers, affecting occupations such as technicians, engineers, electricians, welders and other crafts workers who cannot be found locally or cannot be trained immediately. Shortages are affecting different industrial sectors – from textiles to the automotive industry – and companies of different sizes.

Employers see the solution as creating better working conditions, together with employing third-country nationals (largely from Ukraine). They are urging the Czech government to make it easier to employ foreign workers.

The government has responded to the situation with the UKRAJINA project, a recruitment programme introduced in early March 2016 (having been granted government approval in November 2015). However, employers do not approve of the project’s criteria, which focus solely on the employment of highly educated and skilled workers. Employers are demanding that the terms of the initiative be extended to include less-skilled workers on correspondingly lower incomes.

The Czech Republic's largest trade union association, the Czech and Moravian Confederation of Trades Unions (ČMKOS), views these proposals with suspicion. It argues that the main cause of the skills shortage is the fact that local employers are unwilling to consider either higher rates of pay or providing training for workers to fill vacancies. This is in line with ČMKOS's ‘End to Cheap Labour’ (Konec levné práce) campaign, which expresses concerns that employers are making systematic efforts to maintain low labour costs. One of the trade unions’ objections to employer organisations' proposals is that low-skilled occupations command much lower wages in Ukraine than in the Czech Republic.

Low wages and a potential lack of teachers

Even the education sector is facing workforce shortages. In spring 2016, the Czech and Moravian Trade Union of Workers in Education (ČMOS PŠ) launched its ‘End to Cheap Teachers’ campaign, to highlight the poor wages paid in the education sector. In addition to low salaries, the teaching profession is not, generally, felt to be an appealing career choice. In the long term, these issues could well have a negative effect on the whole of the Czech economy.

Legislation connected to working life

Restriction of stores’ opening hours on public holidays

New legislation means that shops will be required to remain closed on seven public holidays throughout the year. On 28 June 2016, after several rounds of negotiations, the Czech parliament approved a bill restricting stores’ opening hours on public holidays. The bill was approved in spite of unwavering opposition from employer associations, including the Czech Chamber of Commerce (HK ČR) and the Czech Confederation of Commerce and Tourism (SOCR ČR).

The new act applies only to shops with a floor space of more than 200 square metres. It does not apply to petrol stations and pharmacies, nor to shops in airports, railway stations and bus stations.

While trade union associations generally support the new restrictions, employer associations strongly oppose the act. HK ČR and SOCR ČR are currently preparing an appeal to the Constitutional Court, arguing that the legislation discriminates against operators of large stores and against the commercial sector in general. In addition, they consider that the proposal amounts to a bureaucratic intervention in market mechanisms, which goes against current European trends.

Paternity leave

In May 2016, the Czech government approved an amendment to Act No. 187/2006 on sickness insurance. The amendment concerns the introduction of one week’s paternity leave in the six weeks following the birth of a child. The aim of this period of leave is to strengthen the bond between the child and its biological father. It is assumed that men will be entitled to the same amount of benefit while on one-week paternity leave as women on maternity leave, that is, 70% of the daily assessment base. Preparations are currently underway for the full text of the amendment to be passed to parliament for approval.

Impact of UK’s referendum result

The UK’s decision to leave the EU has raised concerns among Czech social partners, especially representatives of employers, with regard to its implications for exports.

Threat of mine closure

The future of the largest Czech mining company, OKD, which declared itself bankrupt in May 2016, is not yet clear. Should the government refuse to offer the company a loan bailout, several mines will be closed, resulting in redundancy for around 5,000–6,000 employees.

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