Economic and Employment Growth: Reforms and Initiatives to Address Labor Market Challenges
In recent years, a steady positive trend in the employment rate has been observed in the Czech Republic. In fact, according to statistics from the Czech Statistical Office, more than three-quarters of the population of working age, aged between 15 and 64, is currently working.
The employment rate in the country has definitely improved over the last decade with an increase of about 7 percentage points, and women are also more active.
Data show that the employment situation of women has indeed improved, with an increase of more than 9 percent over the same ten-year period.
The Czech government would like to further boost the employment rate for greater economic growth, for example by providing incentives for women to return to work after maternity leave through part-time contracts. Furthermore, many companies report a shortage of skilled labor, so the government aims to promote the country’s attractiveness in the eyes of international workers and students. NERV experts believe that changes should be made to the national Labour Code, which is considered outdated and rigid. The basic standard, in particular, would benefit from more ‘flexibility in the selection of new employees, regulation of working hours, and resignation of employees’.
Recent initiatives to incentivize women’s employment:
Although employment figures for women show a fair improvement, the Czech Republic still underestimates the potential of women’s work. Furthermore, several sectors are extremely male-dominated and this disparity is particularly evident in management bodies and leadership positions.
Empowering women in the workplace could unlock significant economic growth and increasing the participation of women in the labor force would not only represent a small step towards the gender gap reduction but would also help to solve the labor shortage in Central and Eastern Europe.
In this regard, a few important changes to the Czech Labor Code came into force last October to facilitate a better work-life balance for all workers, but especially for parents and new mothers. In particular, pregnant employees, mothers of young children, and those with dependent care of non-independent loved ones can now request remote working arrangements through a prior written agreement to which the employer cannot object unless they provide a written justification on relevant operational grounds.
Moreover, among other initiatives, the government would like to boost the employment situation for women by encouraging their return to work after maternity leave through the granting of part-time schedules.
Experts predict a positive impact on the labor market as a result of these changes considered beneficial for the country’s employment situation.
These changes suggest that the Czech government is beginning to pay more and more attention to the issue of gender equality, a clearly relevant and sensitive topic. In this, a crucial role is played by the EU’s encouragement.
Measures for Employment and Economic Growth:
The Czech government’s advisory body (the NERV) not long ago announced 37 recommended measures aimed at reinvigorating the economy and industry. These include removing major obstacles for foreigners coming to the Czech Republic to work, attracting more foreign students, and reducing the level of bureaucracy in the country. The proposals can be summarized as changes in the labor market, education, public administration, and investment, the adoption of which is estimated to result in an annual increase of “tens of billions” of crowns in the state coffers.
Foreign workers can help to alleviate the persistent shortages in the labor market, and this is why NERV’s plan calls for a well-regulated supply of workers from abroad, based in particular on the removal of administrative barriers for cross-border workers. To this end, companies should also become more involved in the involvement of foreigners in the market, by giving their support to ensure that they receive language instruction and do not end up in segregated accommodations.
Proposals were also made for attracting international students, including the possibility of simplifying Visa procedures. Although foreign students already account for almost one-fifth of students at Czech universities, obstacles and administrative requirements should be reduced for them too, with the aim not only of strengthening the workforce hoping that they will stay, but also of reversing the current tendency of intellectual capital to choose neighboring countries because of local bureaucratic obstacles.
Finally, even here, a turning point is represented by the proposed modernization of the Labor Code. The changes would be aimed at striking a balance between safeguarding the rights of employees, who will be guaranteed greater flexibility, and giving employers greater freedom of decision. Among others, the NERV mentions the possibility of dismissing an employee without giving a reason, but within a reasonable period and with the inclusion of a severance payment. Although this last point may be negatively perceived, the expert group argues that the current Labor Code favors the employee over the employer, and changing this situation will lead to higher company productivity.
This proactive approach by the Czech government demonstrates its commitment to strategically addressing labor shortages, ensuring economic growth and prosperity.
Sources: https://www.czso.cz/, https://www.camic.cz/, https://www.expats.cz/
