Economic Figures
The Czech Republic lies at the heart of Europe, sharing its borders with Germany, Poland, Slovakia and Austria. Comprised of three historic territories – Bohemia, Moravia and Silesia (the latter of which it shares with Poland) – the country's modern geopolitical structure is made up of 14 recently formed regions and 77 districts. The capital – Prague – is the most developed region in the Czech Republic, and is among the most developed regions within the EU. |
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The greatest asset towards the GDP creation is in the field of industrial production, predominantly in production of machines, electric devices and transport vehicles. In 2008 the automotive industry will create more than 25% of total Czech production and sections of the automotive industry will reach 23% of export, with more than 155,000 people employed.
Another significant industry is the production of electrical devices, which has experienced rapid growth in recent years to reach its current level of 16%. This fact, together with some other growing industries such as fine mechanics and the food industry, proves that Czech production is losing its »heavy industry flavor«.
This economic growth is driving increasing exports and demand for personnel. The unemployment rate has fallen to 5.3% in 2007. The Czech workforce consists of approx. 5.7 million people: 4.9 million employees and 800,000 entrepreneurs (78% without employees).
In 2007 the export of the Czech Republic was largely oriented towards EU countries (85%). Germany (31% of export), Slovakia (14%), France (12%), Great Britain (5%), Italy (5%) and Austria (5%) belong to the most important business partners of the Czech Republic.
Opportunities for Investors
As the Czech Republic has entered the EU, the range of trade and investment opportunities has grown. Expectations are that exporters will continue to profit from the Czech Republic's economic transformation, as major upgrades of pollution control equipment, telecommunications equipment and services, energy production and distribution, housing and municipal infrastructure and medical services continue.
Measured on per capita basis the Czech Republic has become, in recent years, by far the most successful country in attracting FDI in Central Europe. According to estimates, between 3 to 5 billion dollars on average should flow into the country annually up until the year 2010.
For companies from the EU, the Czech Republic represents a low-cost, high-yield investment opportunity close to home and without restriction of labor movement. A strengthening Czech Crown, the local currency, also reinforces the investment opportunities in the country.
The main reason for FDI is still the sufficient number of skilled and less expensive labor in some areas that helps foreign investors to flourish. Nevertheless the situation is changing and it is beginning to be a difficult task to obtain experts in some areas.
The capital of the Czech Republic, Prague, has its own international airport with one of the largest passenger and cargo capacities in CEE, train and bus stations, and highway connection to Germany and Slovakia, which makes it perfectly suited for a logistics and distribution hub connecting the countries Germany, Austria, Slovakia, and Poland.
Prague’s strategic location makes the city very attractive for the establishment of corporate headquarters or regional offices. For example, an increasing number of still affordable rents for luxurious offices makes Prague interesting. DHL, Logica CMG, Accenture and other companies already created their CEE headquarters in Prague, and several other companies also plan to follow their example. Several factors, such as an abundance of cultural and sport possibilities, good public transport and a large number of parks lead to higher quality of life and greater productivity. Prague’s location has become even more attractive after the Czech republic fully joined the Schengen zone in April 2008.
This year, the Czech Republic should be the 3rd largest car producing country (per capita) worldwide after Belgium and Slovakia. At present, there are two large automotive manufacturers: Skoda (a part of the Volkswagen group) and TPCA, and a third, Hyundai, is building its own factory in North-East of Moravia.
Education, Personnel and Labor Market
Skoda auto, Foxconn, Arcelor Mittal Steel, TPCA automotive and Panasonic AVC were among the top ten companies in the Czech Republic (by revenue) in 2006. They are all pleased with conditions in the Czech Republic. Companies such as Hyundai motor, Tesco stores, Asus, Raiffeisen bank and others made their largest investments into their Czech affiliates. They all praise the Czech Republic’s highly qualified, less expensive and available labor force.
Young people have the opportunity to study at the Czech Republic’s 27 universities – some of them are state-run and some private. The government financially covers all educational costs of state universities as well as public basic and secondary schools with 4.5% of GDP (0.6% on universities). In 2006 81,932 students graduated in technology, in social sciences 49,608 students and in natural sciences 25,382 students.
The Czech Republic has a large pool of talented individuals in the fields of science and technology. The country is one of the leaders in the CEE region in scientific and engineering development, with a leading number of 8.4 scientists and engineers in research & development per one thousand working people. By comparison, this ratio in the Slovakia is 5.4, in Hungary 5.5, in Poland 4.6, and in Romania 3.4. Because of the small size of the country, and small local R&D budgets, many top Czech science and technology professionals have to choose between inconvenient relocation to pursue better paying opportunities abroad or often unchallenging local jobs with low salaries. Several foreign high-tech companies have already recognized these opportunities. World-leading IT and technology firms such as Oracle, HP, IBM, SAP, SUN, Microsoft, Siemens and Honeywell are already well established and growing in the Czech Republic.
The level of knowledge of foreign languages is still increasing. On paper, 40% of Czech population can communicate in German (but this applies most to the older generation) and about 27% of the population can communicate in English or Russian. On paper, one third of Czech society speaks two foreign languages. The situation is better with people under 30: most of young people speak English and some also German.
In 2007 the average wage was 22,382 CZK per month (approximately 935 EUR) and has grown in past years, but is still more than twice as low as that of longer established EU member states. Since the 1st of January 2007 the minimum wage is 8,000 CZK per month. Income tax for personnel is set at a flat rate of 15%. The health insurance and social security contribution is 13.5% of gross wage (employee), the employer also contributes to the pension, social and health insurance system with 35%. This means that if an employee has a gross salary of 20,000 CZK per month, the costs for the employer (together with social security and pension and health system) are 27,000 CZK per month (35% more of the gross salary of the employee). This applies to regular, fulltime labor contracts. The labor contract has to contain work activities (tasks), place of work, starting date, salary conditions, pay day, working time, paid leave days and term of notice. The usual trial period is three months.
The usual working time in the Czech Republic is eight hours per day and 40 hours per week. According to the labor code employees can work overtime, but only 150 extra hours per year. This can be also extended somewhat, but with limitations. Workers, technicians and other employees in manufacturing, who do shift work, change shifts at 6 am, 2 pm and 10 pm. Employees on flexitime usually work from 9 am to 5 pm.
In the Czech Republic there are 13 days of bank holiday. The employees have four weeks of paid leave for vacation per year according to the labor code and some companies give as benefit a fifth week per year.
Competent On-Site Personnel Consulting
HILL International Czech Republic has been already active on the Czech market for 18 years. Services offered are based on expertise, trust and person-centered approach, and perfect relations both with clients and candidates. Many domestic and international clients have already benefited from the knowledge, experience and advice of the team.
HILL Czech Republic is a full service provider for all human resources issues. However, the main services are Search and Selection, Executive Search, Outplacement, HR Audit. HILL CZ has gained valuable experience with start up projects in recent years (green field production start ups). |
David Petrů, |
HILL Czech Republic is assisted in this by the experience and know-how of the HILL Group. Over 30 years of personnel and management consultancy, scientific methodology, and an extensive network in Europe and Central Asia enables HILL to provide successful consultancy in the areas of personnel and management for numerous firms in diverse branches.
Please contact us, if you have any questions or requirements:
HILL International, spol. s r.o.
David Petrů, Head of Operations CZ
Mánesova 27, 120 00 Praha 2
Czech Republic
Phone: +420 222 252 999
Fax: +420 224 826 714
dpetru@hill-praha.cz
www.hill-praha.cz
