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Layoffs to strike unskilled laborers

Amid unemployment, highly skilled positions remain strong

By Stephan Delbos
Staff Writer, The Prague Post
November 19th, 2008 issue

The current record-low unemployment rate is likely only a temporary lull before the storm, as layoffs are predicted over the coming two quarters from companies hit by a growing recession in Western Europe. The ranks of the unemployed will be joined by mostly uneducated and unskilled laborers, many of whom are economic migrants or uneducated Czechs, as highly skilled workers continue to be in high demand.
The Labor and Social Affairs Ministry puts unemployment at 5.2 percent in October, down from September’s rating of 5.3 percent, the lowest since 1997, and down from 6.1 percent since January. The Labor and Social Affairs Ministry estimates 130,000 jobs throughout the country are currently waiting to be filled. A growth boom over the past half-decade fueled by foreign investment created thousands of jobs for highly skilled employees, leading to labor shortages for some industries.
“The buoyant market over the last five years meant that it was always difficult to find candidates for highly skilled roles,” said Richard Gilbert of Hays Recruitment. “Good candidates still have many options for new roles.”
While highly skilled positions continue to grow, manufacturing and production jobs are becoming scarcer. After a months-long losing battle against the strong crown’s negative effects on export profits, the Czech auto industry announced in late October that 10,000 workers would be laid off over the next six months.
Worst-case scenario
When industry layoffs were announced, Škoda Auto, the country’s largest automobile producer, said their work force would be unaffected. However, the company has sacked 1,500 workers since September. A spokesman for the company claimed the company was not actually laying off employees, but cutting jobs that are filled by contracted workers, not actual Škoda employees.
“We are not going to have layoffs. There are a few workers hired by us via agencies who we will let go,” said Jaroslav Černý, spokesman for Škoda Auto. “The workers are Polish, Slovak, a few Czech and Vietnamese.”
Despite losses of 2.3 billion Kč in the first half of 2008, the company initially tried to avoid layoffs to recoup losses. Instead, the company had a series of production halts in an effort to stay profitable. The initial halts, which lowered yearly production by more than 13,000, took place Sept. 26 and during the entire last week of October. The company recently announced further production halts Dec. 22 and 23. The cutbacks have meant less work for small parts producers, and Škoda’s thrift has forced a trickle-down of layoffs.
“There have been dramatic changes in the auto industry. All companies, from parts manufacturers to dealers, are cutting back on hiring,” said Cesar Hinojosa of Future Recruitment in Prague. “In contrast, other industries aren’t affected yet, and they say they won’t be,” he added.
According to statistics from the Labor and Social Affairs Ministry, 71.6 percent of unemployed workers have only a basic or secondary education. Layoffs in most industries will be limited to unskilled, largely uneducated Czech and foreign laborers, as these workers are more easily replaced than highly skilled employees and managers. Skilled, experienced Czech workers remain in demand throughout Europe, and Czech companies will fight to keep them, recruiters say. Most layoffs will hit small parts manufacturers who contract with larger car producers, because large companies like Škoda are less willing to lose their highly trained and experienced employees.
“The industry doesn’t want to lose those people, because the companies know that they will be picked up by other countries where they are in high demand,” said Hinojosa.
While the automotive industry cuts back, the Czech IT and telecom sectors will continue to see significant growth and labor shortages. In a country of 10 million, highly skilled professionals are a commodity.
“IT and telecommunications companies still have a high demand for positions,” said Hinojosa. “We have a shortage of these people.”
The majority of Czechs currently unemployed are manual laborers in the east Moravian region. But, as layoffs increase, even cities close to Prague are bracing for a sudden surge of unemployed workers, many of whom are foreigners. Mladá Boleslav, 64 kilometers north of Prague and home to a Škoda plant, will soon face a significant increase in unemployed workers. But some officials maintain that Prague will remain untouched by the financial crisis and any resulting layoffs.
“We think that massive layoffs won’t affect Prague, considering the great variety and relative stability of employers here,” said Jiří Jaroš, labor market specialist at the Labor and Social Affairs Ministry. “We have no information that Prague has been affected [by the financial crisis].”
Jaroš said that the variety of highly skilled work available in Prague make it a deceiving representative for the rest of the country. Typically, the capital has a far lower unemployment rate than more rural areas, where fewer companies are based. The number and variety of businesses in Prague make it an easy place to find steady employment, if you have the skills that are in demand.
“A higher number of jobs than applicants has been a long-term trend in Prague,” Jaroš said. “But it is probably that kind of situation when employers’ requirements are not met by registered job applicants.”

Stephan Delbos can be reached at sdelbos@praguepost.com


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