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CZECH REPUBLIC BOASTS LOWER UNEMPLOYMENT THAN ITS V4 PEERS

Crisis affects employment across the V4 region

DESPITE their common history as Soviet satellite states and their current shared experience as fully-fledged members of the European Union, the Visegrad Group (V4) countries report considerable differences within their labour markets. The biggest problem in the Slovak labour market is long-term unemployment, while the Czech and Hungarian markets report a relatively high jobless rate among unqualified workers. The Czech Republic boasts the lowest unemployment rate in the V4, while Slovakia has the highest.

DESPITE their common history as Soviet satellite states and their current shared experience as fully-fledged members of the European Union, the Visegrad Group (V4) countries report considerable differences within their labour markets. The biggest problem in the Slovak labour market is long-term unemployment, while the Czech and Hungarian markets report a relatively high jobless rate among unqualified workers. The Czech Republic boasts the lowest unemployment rate in the V4, while Slovakia has the highest.

Czech reported a 6.7-percent joblessness rate in 2011 and the same rate in the second quarter of 2012, according to Eurostat, the statistics office of the EU. Poland had the second lowest unemployment in the V4 region, 9.7 percent in 2011. Poland’s jobless rate stood at 10 percent in the second quarter of this year. The jobless rate in Hungary was 10.9 percent in 2011, and it remained at the same level during the second quarter of 2012. Slovakia reported the worst jobless rate within the Visegrad Group, with unemployment at 13.5 percent in 2011. During the second quarter of 2012 it stood at 13.6 percent.

The employment rate in the Czech Republic was 59.10 percent in the second quarter of 2012, according to data from Eurostat. Poland came second, with 54.9 percent employment, followed by Slovakia with 54.50 percent and Hungary with 50.60 percent.

“Slovakia has a relatively high rate of employment but unemployment as well, in comparison with neighbouring countries,” Michal Páleník, an analyst with the Employment Institute, a think tank, told The Slovak Spectator. “A speciality of Hungary is that its rate of employment as well as unemployment is far lower than Slovakia’s. The question is: what do people who are neither employed nor unemployed do?”

Everyone aged 15 or more who spent at least one hour in paid work during the reference week is considered employed, according to labour force survey (LFS) methodology. It also counts anyone who has a job but who was not working due to vacation, illness, maternity leave, training, strike, bad weather or lock-out. People helping in households of entrepreneurs, people working abroad and professional members of the armed forces are also considered working people, based on the methodology.

On the other hand, a person is considered to be unemployed if he or she is aged 15 or older, during the reference week had no paid job, and during the previous four weeks was actively trying to find a job and is able to start a new job in two weeks.

The differences

According to Daniel Münich, an associate professor at CERGE-EI, a joint initiative of Charles University in Prague and the Czech Institute of Economics of the Academy of Sciences of the Czech Republic, the Czech Republic reports the lowest unemployment of all the V4 countries.

“Czechs are doing very well,” Páleník confirmed, adding that he is not able to explain this phenomenon.

One feature of the Hungarian as well as Czech labour markets is their relatively high jobless rates for unqualified workers. The Budapest Institute, another think tank, sees a lack of small and family enterprises and excessive bureaucracy as possible reasons for this.

According to a book about Hungarian employment policy, “From Pensions to Public Works” edited by Károly Fazekas and Ágota Scharle, in western Europe the employment level of the unskilled workforce is nearly the same as for graduates, but employment for unskilled workers is typically provided by small enterprises.

In the Czech Republic there is a significantly higher rate of unemployment among unqualified workers, according to Münich.

“The reason is that in the Czech Republic there is a very low [number] of this kind of people,” said Münich.

The most specific feature of the Slovak labour market is long-term unemployment, while the Czech Republic does not report this negative phenomenon. In this respect Münich points to a high share of working-age people without jobs who are not registered at labour offices.

“This relates to the issue of socio-economic exclusion zones, i.e. Roma communities,” said Münich, adding that this phenomenon is much more common in Slovakia than in the Czech Republic.

The crisis

The economic crisis has curbed employment and increased unemployment in all V4 countries. In Slovakia, the unemployment rate increased by four whole percentage points, from 9.6 percent at the end of 2008 to the current 13.6 percent. The Polish labour market is now in a better position than Slovakia, according to Páleník.

Either Slovakia or Hungary has had the highest jobless rate over last few years, but currently Slovakia tops the ranking.

“[During the current crisis] the employment rate has not decreased so dramatically in Slovakia, but the jobless rate has increased quite significantly at the same time,” Páleník said. “Some workers were fired, some people returned from foreign countries like the Czech Republic, England, Germany, Austria and others where they used to work, and their status changed from “non-existent” to “unemployed.”

In the Czech Republic the jobless rate has increased by at least one third, according to Münich. Middle-aged men with just a high-school education are the most affected because the crisis has hit mostly industrial production, which makes up a high share of employment in the Czech Republic.

Alica Balaščíková and Ján Beracka are students of the University of Economics in Bratislava

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