COVID-19 crisis and the labour market in the Czech Republic - The recovery

Abstract

In this paper, I focus on assessing the effects of the COVID-19 pandemic on the labour market in the Czech Repub- lic. The structural indicators of the labour market over the years 2020-2021 are observed and the persistence of these effects is evaluated with the data already available for 2022. An important part of the study is a review of studies concerned with labour markets abroad, especially in the European context. Throughout the pandemic in the Czech Republic, the long-term average unemployment rate rose steadily, but the highest point reached was only a modest 3.4% at the height of the epidemic, predominantly thanks to the extensive government spending policies to com- pensate for both the drop in demand and the restrictions imposed, and by the start of 2022 it had recovered. The employment rate dropped below the long-term average but recovered to the pre-crisis levels in 2022. In absolute numbers, the number of people actually working dropped by more than 100,000 between the end of 2019 and the end of 2020, but it had recovered by the end of 2021. After that, another drop, which can be attributed to other factors, occurred. I document that the employment effects were highly heterogeneous in terms of area of work and some of the changes will be permanent. There was a delayed drop in the self-employment rate. In terms of long- term effects, both the unemployment and employment rates as well as some structural indicators returned to the long-term average in 2022, but the self-employment in some segments in particular has not recovered since. The analysis of the permanency of some of the more subtle effects with longer recovery periods is difficult due to the coincidence of the onset of the newly emerging energy crisis and the COVID-19 recovery period in 2022.