Labour market situation to improve in 2020

Czechia's employer associations expect the economic growth to slow down a little in 2020 and the tight labour market to loosen up, according to a CTK poll.

With growing wages, the labour market situation is the biggest obstacle to growth of Czech businesses, the poll showed.

In 2020, the Czech economy will grow by 2 percent, expanding for the seventh year in a row and slowing down from 2.7 percent in 2019, Confederation of Industry economic policy section head Bohuslav Cizek said.

The economy is backed by a stable domestic demand driven by household consumption thanks to high employment and quick wage growth, Cizek said.

The Chamber of Commerce expects GDP to expand by 2.7 percent next year, same as this year, considering it positive compared to other European countries.

However, the growth will not be general. Even now the development is different for different fields, company sizes and regions, Chamber of Commerce spokesman Miroslav Diro said.

GDP growth will not stop in 2020, Association of Small and Medium-Sized Enterprises deputy chairwoman Pavla Breckova said.

The market situation, however, can be expected to improve a little because there have been signs of companies letting people go, which means the quality of workforce may get better in the future, Breckova said.

Thanks to that the wage growth may be more moderate than it was in the past few months, she added.
There will be lower pressure on pay rises but wages still may grow faster than labour productivity, Cizek said.

Wage growth together with high prices of materials, raw materials and energy represent the main obstacle to growth of Czech companies, according to a survey of the Confederation of Industry and the Czech National Bank (CNB).

Nominal wage growth should reach 6.2 percent in 2020, the Chamber of Commerce said. Reasons include satisfactory economic results and attempt to keep employees or get new ones on the exhausted labour market.

Other factors are of an administrative nature and involve pay rises in the public sector and growth in the minimum wage and guaranteed wages.

Source: CTK