We would like to remind you that during October and November unemployment rate at level 3.5 %. During December it rose to a level of 3.7 %. This is exactly the result that was also anticipated. After all, seasonal jobs are terminated before winter every year, which was hastened by the bad weather in 2023. In addition, some employees regularly see their contracts or agreements end before the end of the year. We should also not forget about tradesmen who may temporarily suspend their activities. Given the changes for self-employed workers in the consolidation package, this is not surprising. Finally, some manufacturing companies are also reducing their workforce due to weak orders. To take one example: the bathroom and sanitary ware manufacturer Laufen CZ will reduce production in Znojmo and lay off 250 employees.
Going by the numbers, at the end of last year the employment offices reported a total of 279 227 job seekers. Their number was 16,000 higher than at the end of the previous month. At the same time, jobseekers could find 271,789 job vacancies on the job centre notice boards. Their number was almost 7 thousand lower than in the previous month.
When we put the numbers together, we find that the number of applicants per vacancy has risen to just above one. So we no longer have more vacancies than unemployed, but the opposite. However, from a ten-year perspective, nothing dramatic has changed. At the end of 2013, there were 17 unemployed people for every job vacancy. Today, it is still much easier to find a job. On the contrary, it is still very difficult for employers to find qualified employees. We see a particular hunger for employees in technical and blue-collar occupations. There is also a long-term demand for skilled craftsmen. In other words, three quarters of the vacancies are for candidates with primary or lower education.
This suggests a lot about the structure of the Czech economy. The Czech economic model has exhausted itself. We are no longer a country with enough cheap yet relatively skilled labour. We are increasingly oriented towards production with lower added value. Unfortunately, if the euro were to be adopted, this character of the Czech economy would become even more pronounced, because a fixed exchange rate would lead to the need to compete with low prices, i.e. increasingly primitive, uncomplicated production. Sophisticated production with high added value would thus be left to countries like Switzerland with a floating exchange rate.
Not enough of that. The development of electromobility is becoming a major complication for Czech car companies, which have historically been oriented towards the production of cars with internal combustion engines. The Czech Republic and Slovakia are most at risk. These countries are at the top of the rankings in terms of per capita car production. Bloomberg has gone so far as to warn that the Czech Republic and Slovakia could become the "Detroit of Europe". (Detroit in the US has become a "ghost town" following the collapse of the local carmakers General Motors and Chrysler. The factories there abandoned their buildings and they began to decay. Unemployment soared to 30 %, and some estimates put it as high as 50 %.)
The koruna is weakening slightly towards CZK 24.57/EUR, losing some of its recent gains. Despite the recent rise, the unemployment rate remains at low levels in the long term. In this case, this is one of the few arguments for the Czech National Bank not to rush to cut interest rates further. On the other hand, the easing of inflationary pressures and the overall weakness of the Czech economy argue in favour of the Czech National Bank cutting interest rates further. This should push the koruna to weaken even further against the euro.
Markéta Šichtařová
company director
Next Finance s.r.o.
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