Czech jobless rate drops to 8.2 pct

May unemployment statistics met expectations and showed positive developments but remain high in the long-term comparison

The unemployment rate was 8.2 percent at the end of May 2011, according to the Czech Ministry of Labor and Social Affairs (MPSV). This was a drop from the same period in 2010, when the rate was 8.7 percent and from the previous month, when it was 8.6 percent.

“May’s unemployment data did not surprise when its rate dropped in line with the consensus. …. All 77 labor offices recorded a month-on-month decrease,” Komerční banka analyst Miroslav Frayer said in a market comment.

Job offices registered 489,956 job seekers at the end of May, some 23,886 fewer than at the end of April and 24,823 fewer year-on-year. The number of available job seekers currently available for work was 467,774.

“It is positive that the decrease was not solely due to favorable seasonal factors, but that also the seasonally adjusted unemployment rate decreased. During the past five months, it dropped 1.2 percentage points, according to our estimates, and more than offset the deterioration from the second half of last year,” Frayer said.

Unemployment trend in the Czech Republic

During May, job offices registered altogether 44,627 newcomers and registration was terminated with 68,513 job seekers. New jobs were taken up by 47,166 persons. “The statistics of new vacancies show that the situation on the labor market improves also from this point of view. The number of vacancies increased 1,596 compared with April; in a year-on-year comparison, there were 4,544 more,” Frayer said. ‘It is positive that the decrease was not solely due to favorable seasonal factors.’

Currently, there are 13.0 job seekers per vacancy on average. “[This] represents a visible improvement from the historic high of 18.2 from December. Still, the figure remains significantly higher than what we were used to before the crisis,” Frayer said. The highest current level is in the Prostějov district, with 48.2 job seekers per vacancy.

The unemployment rate is currently being influenced by favorable seasonal factors. “The seasonally adjusted rate of unemployment is also beginning to decrease continuously — nevertheless, in a long-term comparison it is still located at high levels,” Frayer said.

Some 43 districts had an unemployment rate higher than average, with the highest in Most, Bruntál, Jeseník, Děčín and Karviná (13.5 percent). The lowest unemployment rate was in districts of Prague-east, Prague-west, Prague and Mladá Boleslav. ‘These figures are consistent with the stabilization of the unemployment rate.’

“Necessary fiscal restrictions in the eurozone and in the Czech Republic should reflect negatively in a slight slowdown of economic growth (compared with last year’s plus 2.2 percent, we expect plus 2.0 percent this year). These figures are consistent with the stabilization of the unemployment rate. At the end of this year, we expect the unemployment rate at slightly below 9 percent,” Frayer said.

The unemployment rate in April was 6.8 percent according to the EU statistical arm Eurostat, which uses different methodology. In the eurozone it was 9.9 percent and in the EU 27 it was 9.4 percent. The highest rate was in Spain, with 20.7 percent, while the Netherlands and Austria tied for the lowest, with 4.2 percent.

Wages rise overall, drop in nonbusiness sphere

Separately, the Czech Statistical Office (ČSÚ) said that the average gross monthly wage for full time employees in the first quarter of 2011 across the entire economy increased by 2.1 percent (Kč 471) year-on-year to Kč 23,144. In the same period, consumer prices rose 1.7 percent, making the real wage increase 0.4 percent.

The average wage in the business sphere rose 3.0 percent, for a real wage increase of 1.3 percent. In the nonbusiness sphere, however, the average wage fell 1.7 percent or 3.3 percent in real terms. Compared with the previous quarter, the Q1 2011 seasonally adjusted wage rose 0.6 percent, the ČSÚ said.