Labor productivity in the Czech Republic

We are in a situation that few would have imagined last year. Most of us work more from home than from the office, and what’s more, we are encouraged not to go to the office at all.

There has been a lot of research on how employees deal with work from home and whether it suits them or not. No matter how we are handling the current situation, productivity is becoming a key concept. A concept that companies were not following at all when most employees were sitting in their offices.

The lack of attention of companies to this topic is also supported by the following numbers. “Work productivity as such is monitored in 68.8% of companies with foreign owners and in 47.1% of companies with Czech owners.” (Wagnerová, 2011)

Productivity significantly affects the salary in 55.9% of companies with foreign owners and in 7.1% of companies with Czech owners. (Wagnerová, 2011) In OECD research, the Czech Republic lags behind advanced Western economies, and there is no indication that this situation should change in the future.

In 2018, according to Eurostat data, the Czech Republic ranked 19th within EU countries with 83% in terms of nominal labour productivity per capita. The advanced Western economies, led by Ireland with 190%, remain far ahead. The Netherlands is also in the forefront with an above-average 110%. The Czech Republic, together with other Central and Eastern European countries, still remains on the imaginary tail. (Eurostat, 2020)

The position of the Czech Republic is completely different in comparison with EU countries in the number of hours worked per employee per year. With 1,792 hours per employee in 2018, the Czech Republic ranks 2nd in the number of hours worked per employee along with another Central European state, namely Poland. Entrepreneurs and self-employed persons were included in the data. By contrast, the Netherlands is the fourth country with the least hours worked per employee in the EU, with 1,433 hours. (OECD, 2020)

In our opinion, the labor market in the Czech Republic is not flexible enough and does not sufficiently respond to the challenges of the future. This corresponds to the low percentage of part-time work. In 2017, 10.9% of women and 2.4% of men were employed part-time. In contrast, the EU average was 31.7% for women and 8.8% for men in the same year. The Netherlands topped the list with 75.8% of women and 27% of men employed part-time. (ČSU, 2018) It is the possibility of part-time work that is an important point on the way to a more flexibly-functioning  labour market. Thanks to that, employers can verify the time intensity of individual activities and thus change the approach of employees to the task performance.

Discussions about the length of working hours are necessarily related to the topic of productivity. In the past, some states have resorted to shortening it. In the European Union, it was France that reduced the weekly working hours from 39 to 35 hours. General reduction in working hours is also a requirement of the CMKOS, from the current 40 hours to 37.5 over 4 years. In the aforementioned France, however, this change has led, for example, to “an increase in overtime for men.” (Raiffeisenbank, 2018)

In the coming months, we will observe how the pandemic has affected the way people work. If we move towards greater flexibility and efficiency, this could be one of the positive things we can take away from this current health crisis.