A Problem For Czech Companies: The Germans Will Give Jobs To Ukrainians

Below is a translation of an article by Petr Zenker in the Czech business daily, Hospodářské noviny. In November last year, I published similar information from the Polish daily Rzeczpospolita about labour migration further West. 

It will have consequences for machine-building and the car industry.

In recent years, Czech companies found it increasingly harder to recruit new employees. There are fewer unemployed because during a period of economic boom, unemployment dropped to record lows. Companies are now forced to draw worker from their competition or to seek them abroad. But soon, this problem might become even more acute. Germany prepares a breakthrough step, starting next year she will allow people from outside the EU to join her job market.

It will concern mostly Ukrainians, who are a key component of many Czech companies. We can expect that many of them will give preference to a higher salary in Germany over work in the Czech Republic. It will have impact mainly upon our car industry and machine-building thinks Radek Špicar, the vice president of the Union of Industry and Transport. He estimates that: “Especially qualified specialists will go to Germany rather than to Czech Republic.”

The Union of Entrepreneurs in Construction sees this as a serious problem that does not have a solution. Jan Fidler, a shareholder in the company, Hinton says: “The biggest danger will be to our subcontractors, who have a large share of workforce from Ukraine. We are talking about hundreds of smaller firms. But in this way the problem will concern general suppliers as well.”

The new regulations were negotiated upon by the German [ruling] coalition before Christmas, and it is expected the Bundestag will agree to it in the middle of the Year. The Germans have decided to change their attitude because of the same problem that plagues Czech companies: the companies over there (in Germany) suffer from staff shortages, which slows down economic development. Germany currently has one million of free vocations, the Czech Republic has 300 thousand. (translator’s note: relative to population, the Czech Republic clearly has a worse problem)

The key difference in accepting employees from outside the EU will be that the Germans, unlike the Czechs, will not introduce any quotas. That is simply, anyone who meets the skill and language requirements will receive a job in Germany.

The Czech Republic allows for this only in a limited way. From 2016, 20 thousand Ukrainians are allowed to enter the country every year. But the demand from companies far exceeds this capacity. Špicar from the Union of Industry and Transport says: “We are asking the government to increase the workers’ quota to 40 thousand per year.” The doubling of the quota is now being finalised by the government, and should start working from April.

120 thousand Ukrainians work legally in the Czech Republic at the moment. After Slovaks, they are the second most numerous group of foreign workers. Most Ukrainians are active in Poland, where 500 thousand have found their livelihood. The Polish have for a long time been the most open to workers from Ukraine, and do have that many barriers in their employment.

The Ukrainian workers are lured to Poland and the Czech Republic by higher salaries than what they have back home.  The average wage in Ukraine is around 7200 CZK. In the Czech Republic, the Ukrainian workers receive on average slightly more than 25 thousand CZK. Large part of them find work through agencies and receive less money. In Poland, according to the agency Personnel Service, the majority of Ukrainians receive between 15 and 21 thousand CZK. (translator’s note: 1 USD = 22.50 CZK at the time of writing)

Germany’s bold entry into competition over Ukrainian employees will fundamentally change this salary perspective. The average wage in Germany is greater than 2000 EUR, that is 50 thousand CZK. Czech companies will have to raise wages for the Ukrainians to keep them from going after the better German salary.

The Czech Republic and Poland will retain a competitive edge over Germany due to their linguistic closeness to Ukraine. That is a reason, why the opening of the German market does not automatically mean that all the Ukrainians will go there.

“We are not losing people who have already arrived. The problem of Czech Republic is that she isn’t as flexible in comparison to Germany and Poland in managing the influx of workers that the economy lacks. They will rather go to Poland or Germany,” says analyst, Tomáš Ervín Dombrovský from the company LMC.

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