Czechia has the lowest unemployment in the European Union, at 2.9 per cent, says the recent Eurostat report. The country is followed by Germany (3.8 per cent) and Malta (4.1 per cent). Even though there are countries with lower labour costs, Czechia’s costs are still significantly lower than in Western Europe; the average hourly wage cost in the country is only €10.20 compared to €24.40. So, what else makes Czechia an attractive business destination?
“Apart from labour costs, we have a high ratio of manufacturing plants, which concentrate on employing a qualified workforce. This attracts even more investments within already existing operations. Fields and services are enlarging their operations and looking for more employees. In addition, investors have learnt that the initial investment, required to start a business, is considerably lower in the Czech Republic than among other countries in the CEE region,” Ladislav Kučera, managing director at Hays Czech Republic, tells Emerging Europe.
Such an initial investment may include construction costs or the cost of acquiring a plot of land. According to Deloitte, the Czech Republic also ranks among the countries with the highest net income, and this is mostly the result of a flat tax rate, as well as the non-existence of progressive taxation.
“Unfortunately, our legislation and educational systems are not very flexible. Within the current labour market we are seeing a much higher demand for a workforce than there is a supply. The lack of workforce might be the biggest blocking point for future economic growth. We would need to attract talent from abroad and to gear our education system much more towards the corporate world’s needs. Lower cost will not work in the long-term, as with higher economic growth and the lowest unemployment rate (in the whole of Europe), wage pressure will continue to increase, and, thus, cost will increase,” comments Mr Kučera.
According to a survey, released by the Organisation for Economic Cooperation and Development (OECD), the Czech Republic faces another risk that is linked to growing innovation. Although it is ranked as one of the most innovative country in the CEE region, together with Slovakia, the Czech Republic could lose even more jobs due to an increasing automation.