Czech jobless rate nears nine-year high: Which industries are feeling the pinch?

Unemployment in Czechia is the highest it’s been in almost nine years, according to newly released data from the Czech Labor Office. Analysts attribute the increase to continued layoffs in the industrial sector, even as the economy shows signs of growth.

While the figure, now at 4.5 percent, may raise some eyebrows, economists say the labor market remains stable. Only Malta currently reports a lower unemployment rate within the EU. 

Demand for workers remains strong in services, logistics, and hospitality, particularly in Prague and Central Bohemia. However, jobs in manufacturing-heavy industries (employing many migrants), such as in regions like Ústí nad Labem or Moravian-Silesia, are becoming harder to find.

At the end of August, 333,624 people were registered as unemployed, about 4,000 more than the previous month. On average, there were 3.5 job seekers per vacancy, but in industrial districts like Karviná (Moravia-Silesia), that number was as high as 23.

Government officials said the rise was typical for summer months, when hiring usually slows.

“The August figures further confirm that the domestic labor market is cooling slightly, despite the fact that the economy is growing. The reason is mainly the continued decline in employment within the industry sector," said foreign-exchange company Citfin's chief analyst Miroslav Novák.

"The positive thing is that the service sector has been able to compensate for layoffs in industry in recent quarters,” he added.

Regional differences remain sharp. Ústí nad Labem Region posted the highest unemployment rate at 6.7 percent, followed by Moravian-Silesian at 6.3 percent. Prague had the lowest rate at 3.5 percent, supported by strong services demand. The district of Most recorded the highest unemployment at 9.5 percent, while Rychnov had the lowest at 2.6 percent.

Looking ahead, analysts expect unemployment to stay stable in September and October as companies resume hiring and graduates enter the workforce. “At the end of the year, the unemployment rate will jump again to around 4.7 percent due to seasonal factors,” ČSOB analyst Dominik Rusinko said.

“We expect the labor market to stabilize over the next year, thanks to faster economic growth and a revival of activity in industry,” he added.