The Czech labour market continues to face challenges related to low unemployment, which, however, is beginning to slow down – signs of market cooling are becoming evident. While many employers are still struggling to find qualified workers for many positions, according to indicators from the Czech Statistical Office (ČSÚ), industries such as manufacturing, financial services and others, plan to reduce employment in the coming months. Conversely, the retail sector is expected to see an increase in employment.
According to official forecasts, the unemployment rate was projected to reach 3.8% by the end of 2024. However, the reality was slightly worse with the unemployment rate at 4.1% at the end of 2024. This level brings us closer to the state of the labour market in 2017, when it began to show signs of overheating.
Wave of Layoffs: Impacts on key sectors
Despite low unemployment, layoffs affected thousands of people throughout 2024. The most impacted sectors included:
- Manufacturing and chemical industries
- Automotive industry
- IT sector
Expansion of Czech companies abroad: Opportunities and Challenges
While some employers are downsizing, others are seeking opportunities abroad. Czech capital is increasingly penetrating global markets. The expansion seems to be case especially for our traditional industrial sectors. Companies like Česká zbrojovka, CSG, PBS, Linet, Wikov or Draslovka are investing in international sales offices and/or production capacities.
With expected economic developments in the USA and Europe, this trend is likely to continue. While this international expansion offers many positives, it also has implications for the domestic labour market. As Tomáš Kolář, CEO of Linet Group, noted in an interview: “Opening an assembly line in the USA means 30 new jobs there but at the same time 30 fewer jobs in the Czech Republic.”
What Lies Ahead for the Czech Labour Market?
Although the unemployment rate remains low, changes in the labour market are undeniable. Both employers and employees will need to navigate these shifts carefully.
