Employment of foreign and agency workers and their effect on the employment statistics
Whereas total employment according to the LFS has in recent quarters been nudging at the historical highs recorded in 2008, it has not yet reached its pre-crisis levels according to the national accounts methodology (see Chart 1). One of the factors explaining this difference is the different methods used to acquire data on the number of foreign employees. The national accounts data on employment of foreigners are acquired directly, whereas the LFS data cover foreign nationals working in the Czech Republic to only a limited extent, as this survey is usually conducted among persons living in family houses and apartment blocks.1
Chart 1 (BOX) Employment according to LFS and national accounts
The different levels of employment according to the LFS and the national accounts are due mainly to the different methods used to acquire data on foreign employees
(numbers of persons in thousands; seasonally adjusted data; source: CZSO)
Employment of foreigners2 changed substantially during the period under review as regards their country of origin and as regards the classification of employment (CZ-ISCO).3 Owing to strong economic growth, employment of foreign workers peaked in 2008 (see Chart 2). Approximately half of these workers came from the EU and other EEA countries. The economic contraction in the following years resulted in a marked decrease in the number of foreign workers. This affected workers from non-EU/EEA countries to a greater extent. The renewed surge in the number of foreign workers in 2014 reflected a strong recovery in domestic economic activity and a related positive turnaround on the labour market. This growth was driven mainly by an increase in the number of workers from the EU and other EEA countries. Overall, the number of workers from the EU and other EEA countries thus increased compared with 2008, primarily thanks to employees from Slovakia and to a lesser extent from Romania and Bulgaria. However, this was more than offset by a large decrease in the number of workers from Ukraine (of more than half compared with 2008) and from Vietnam and Mongolia. Consequently, the total number of foreigners working in the Czech Republic last year was still below the 2008 level.
Chart 2 (BOX) Employment of foreigners
Citizens of EU and other EEA countries accounted for most of the growth in the number of foreign workers in 2014
(numbers of persons in thousands; MLSA data and estimates)
As regards the classification of employment (CZ-ISCO), a larger share of high-skilled foreign workers (i.e. professionals, technicians, clerks, service workers and shop and market sales workers) in the total number of foreign workers was recorded in 2014 compared with 2008 (see Chart 3). By contrast, a markedly lower number of foreign workers were employed as craft and related trades workers, as plant and machine operators and in elementary occupations.
Chart 3 (BOX) Professional structure of foreign workers
The employment structure of foreign workers has shifted towards high-skilled professions
(numbers of persons in thousands; according to CZ-ISCO/KZAM; MLSA data and estimates)
Note: Data are not available for 2012 and 2013.
However, the marked recovery in economic activity was associated with a resurgence in demand for less-skilled workers. Unlike in 2008, this demand was apparently met by agency workers (predominantly Czechs) amid a still relatively low number of foreign workers in these positions. This is indicated by AEIS data,4 according to which the number of agency workersincreased significantly compared with 2008, especially in less-skilled jobs (see Chart 4).5 According to a CZSO survey, the number of agency workers increased sharply in industry in particular, on the back of buoyant growth in economic activity.
Chart 4 (BOX) Structure of agency workers
The sizeable growth in the number of agency workers compared to 2008 was due primarily to less-skilled workers
(numbers of persons in thousands; according to CZ-ISCO/KZAM; source: AEIS, CNB calculation)
The plethora of information on labour shortages in the labour market (especially in technical professions) indicates that the interest of firms in foreign workers and employment agency services may increase further. Given the weaker position of these groups of workers on the labour market, reflected, among other things, in lower wages, this may dampen the currently observed increasing upward pressure on wages.
1 The survey is not conducted in hostels, where foreign workers – especially those in less-skilled jobs – are often accommodated.
2 Given the limited availability of data on employment of foreigners, this box works with year-end data. After 2011, these are MLSA estimates, not hard data.
3 The pre-2011 data were processed using the KZAM methodology.
4 The data in this box acquired from the MLSA cover approximately one-half of the employees working in the waged sector and have not been converted to the entire population.
5 The data for 2015 H1 have a different seasonal component than the data for 2008 and 2014, which relate to the year-end.