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Low unemployment in the Czech and Slovak Republics – Danger to economic growth?

31.08.2018

The Czech and Slovak economies have been in great shape for several years now and still continue to improve with companies reporting record results year after year. Today, the two are among the largest manufacturing bases for the automotive industry in Europe. Countless car parts are manufactured there and hundreds of thousands of finished vehicles leave their production lines every year. There even is a saying that it is possible to assemble a complete car from parts made within the territory of the two countries - it would be a funny hybrid between ŠKODA, TOYOTA, KIA, HYUNDAI, PEUGEOT, JAGUAR and LAND ROVER, but it would drive!

Nonetheless, the two economies are facing a serious challenge due to their own success. 

A few years ago, we have already talked about the war for talents but today, companies are in an even more urgent need to find the right people.

A historically-low unemployment rate of currently only around 3% obviously has a direct influence on wage levels. In recent years, employees' salaries have grown significantly. This is especially the case for industries such as manufacturing and services. And the shortage does not only apply to management and expert ranks - hiring a waitress or a cook for example has become almost impossible. Futhermore, there is also a lack of workers in horticulture, forestry and agriculture. Hospitals constantly lack nurses and nursing staff so that non-accute operations have to be postponed for weeks and months.

Subsequently, aspects such as the age and past experience of candidates become way less important which is especially beneficial for older applicants and career changers. Companies also offer employees additional flexibility in order to become more attractive - part-time work and home-office solutions have become the new standard. New approaches like this ease the problem but do not solve it. Even with such benefits, companies across the board are not able to balance supply and demand when it comes to their employment needs.

Since in both the Czech and Slovak Republics there are no strong birth years in sight, filling job vacancies will continue to be difficult for years to come. As a consequence, the role of Executive Search has and will become even more important for companies in both countries in order to find the people they need. 

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With more than 20 years of experience in covering the Czech and Slovak markets out of our office in Prague, Kienbaum helps companies all over the region to meet their demand for executives and top-management profiles in order to keep their businesses running. But that is not all – with additional offices in Warsaw and Budapest, Kienbaum is your ideal partner for the entire CEE & CIS region. Therefore, please do not hesitate to get in touch with us today and talk to one of our experienced consultants. We are more than happy to assess your individual situation and provide you with tailor-made solutions for the challenges you might face.