ASK: WHAT WILL THE LABOR MARKET BE IN 2020?

Each year has its own specifics in terms of the economic situation and the labour market. This will be the case in 2020. We have had 2 years of turbulent changes in the labour market in the sense of high employment, labour shortages primarily in working-class, manufacturing positions, wage increases and the employment of foreigners.

Let’s look together at what happened in 2019, what the state of the labour market is now and what lies ahead in 2020.

HR FACTS 2019

We have the second lowest unemployment rate in the world

(2.7% -3Q2019). Yet 6% more people are looking for work than a year ago because they want a better place than they have. In 3Q 2019, this tendency has strengthened further and workers are less amused by the work, less willing to recommend employers.

What are TOP10 employees’ motives for changing jobs?

Higher wage
Greater flexibility
Corporate benefits
Better availibility of workplace
Corporate benefits – addon money
Better fill of your job
Better career growth option
Better team, co-workers
Corporal benefits ( equipment etc..)
Better , more decent employer approach to you

The percentage of people who quit their jobs of their own free will is also unfavourable, so they quit in 2019 – a full 60%. In the future, this trend seems unlikely to stop. In surveys (by LMC), 14% of those surveyed confided that they were actively looking for a new job, and a full third of all employees are willing to listen to interesting offers at least. People are willing to change jobs and are more proactive about it because they feel confident and believe the economy is doing well.

Benefits

The 3 most representative benefits that employees use today:

Food stamps, catering allowances
1 extra week of holidays
Life insurance allowance
Canteen
Snacks at work

Of the commonly established benefits, the most important to them from the employees’ point of view is:

One week more of holidays

Possibility of bonuses and premiums by results achieved

Food stamps

Benefits that employees don’t have and would like to have:

One extra week of holidays

2 and more extra weeks of holidays

Holiday and Recreation Allowance

Pension, health insurance

Paid sick – days

Wage growth

Last year (perhaps even the previous one) bore in mind expectations of slowing economic growth. We were able to see this at the end of 2019, however it did not have a significant effect on the effect of employment. Even at the end of 2019, wage increases continued mainly for manufacturing / labour positions.

Wages will continue to rise in the new year, but the pace of their increase is likely to slow by now. In fact, they have grown faster than labor productivity in past years. And that mismatch will now need to be offset by companies. Although wages are still expected to increase faster than labor productivity.

2018 – growth by 8,1% – 31 885, – CZK

2019 (Q3) – growth by 6,9% – 33 697, – CZK

2020 (assuming) – growth by 6,2%

CURRENT WAGE LEVEL (source Jobsindex Q32019, company LMC)

Administration / middle management	CZK	Manufacture	CZK
SW architekt	71 900	Mistr	36 655
Programmer	65 741	Driver	32 532
IT analytic	64 521	Elektrotechnic	32 156
Regional business manager	53 131	Electrician	31 625
Project manager	52 473	Mechanic	30 532
Account manager	48 231	CNC Machine Operator	29 705
Finance analytic	47 144	Cook	29 961
Trade representative	43 119	Head of the dealership section	29 690
Project architect	42 943	Maintenance man	28 666
Accountant	37 375	Business assistant	27 076
Electrotechnician	36 584	VZV driver	26 535
Bank specialist	34 165	Receptionist	26 356
Call centrum worker	32 801	Worker	25 527
Administrative worker	28 872	Warehouseman	25 470

VISION FOR YEAR 2020

“The Czech economy will grow in 2020 for seven years in a row. Growth in the economy will slow slightly from 2.7 percent in 2019 to 2 percent, “says Industry and Transport Union Economic Policy Section Director Bohuslav Rich. The economy, he says, can rely on stable domestic demand held by household consumption thanks to high employment and rapid wage growth. Employment unions expect a slight slowdown in economic growth in 2020. There is also an improvement in the tight labour market situation, which is the biggest barrier to the development of Czech company as a result of rising wages.

But economic growth will not be flat next year. The development already differs more significantly by industry, the size of the company and, apparently, the region, said Chamber spokesman Miroslav Diro.

However, the labour market situation can be expected to improve slightly, it says, as there have been signs of small redundancies. It means that the quality of the workforce could start to increase again in the future. If the economy brakes and people get laid off in the labor market, it will signal their own recruiting for other companies. In recent years, the lack of human resources has forced them to take almost everyone who wants and can work. But not all people in companies have been persuaded, and elsewhere, laid-off workers can quickly start replacing them.

WHAT TO EXPECT AND HOW THE NEW TRENDS WILL BE 2020?

A shortage of qualified staff is expected. While so far, employees have been mainly absent from the labour and manufacturing professions. This implies the need for a change in the setting up of the work motivation and evaluation system, as the needs of skilled workers are different.

Taking into account economic influences (Brexit, German automotive industry ad.) there may be a so-called staffing paradox, whereby, on the one hand, the firm dismisses people for redundancy — mainly from manufacturing and from redundant THP, while recruiting — into development, innovation and commerce. This paradox, or the measures associated with it, can lead to conflicts within the company, and there is a need to prepare for them, too.

The volume of corporate orders is slowing considerably (especially for those firms tied to German industry). In addition, multinational groups are working intensively on optimizations to reduce costs. These optimizations do not always reach Czech branches, but at least they are known to be, and they are known to be, in themselves, preparing for much more radical steps in the future. Layoffs have already started in some firms and, if not with him directly, preparatory work, staff and capacity audits, moving some of the staff to external resources, for sure. One can assume that this problem will deepen.

Industrial companies, in particular, have lived on the theme of “digitising industry” in recent years. The question remains how many companies have managed to make the change in real terms. In 2020, these changes are expected to continue. But not to be “trendy and modern,” but because of the real need for product innovation, a service, to increase customer comfort. In this situation, management will be forced to incentivise its employees into performances that may not only be different than they have been, but also against their internal beliefs as well as the firm’s discourse to date. The transition to these changes will not be easy. There will be a need to prepare for the emergence of new jobs related to automation and robotization.
Working hours – there are lively discussions and first attempts to unwind working hours. At a time of automation and robotization, do you need to go to work for eight and a half hours five days a week? Extremes speak of unlimited leave. Don’t be alarmed, the practice showed that as a result, workers then took less time off than before.
There will be a need to adapt the behaviour and values of the new generation, while preparing for a currently employable population to age and decline in the coming years. Already five years from now, there will be 195,000 fewer people in the Czech labour market than today, and 400,000 fewer within 15 years. According to data from the Czech Statistical Office, the labour market is really still dwindling. But employers make matters worse for themselves by ignoring certain groups of candidates, especially older people and parents who are interested in returning from parental work early to part-time work. Meanwhile, groups long pushed to the brink of employer interest make up a full two-thirds of the 44,000 people who have reappeared on the market in the first quarter of this year. So there is a lack of part-time work and a willingness to employ older staff.
Employing foreigners will become a standard source of recruitment to both manufacturing and skilled jobs in the year.