The Czech GDP has fallen in the second quarter of 2012; nominal salaries grew, but not as fast as consumer prices; more Czech companies are among top earners in the region; complicated hiring procedures for foreigners may discourage investors; number of personal bankruptcies has grown immensely in the first half of this year.
Czech GDP falls for the third quarter in a row
The Czech Gross Domestic Product fell by 0.2 percent from the first to the second quarter of this year, and is 1 percent less than it was a year ago. The GDP has been decreasing for the third quarter in a row, confirming an economic recession in the Czech Republic. The Czech economy has been shrinking due in large part to decreasing household consumption. Although Czech foreign trade remains in surplus, exports to EU countries suffered as a result of the EU’s debt crisis.
Nominal salaries not growing as fast as consumer prices
The average gross monthly salary in the Czech Republic grew by 2.3% in the second quarter, according to figures released by the Czech Statistical Office on Monday. The average nominal wage was just over 24 and a half thousand crowns, almost 600 crowns more than in the same period last year. Yet, consumer prices grew by 3.4 percent during the past year as well, which actually means that real salaries decreased by 1.1 percent in the second quarter of this year. The increase in the price of living is partially due to the rising global prices of fuel and increase in prices of basic food items. The insufficient growth in salaries may also be due to increasingly slowing production of Czech companies.
Number of top earning Czech companies grows
According to an annual ranking of top-earning companies in Central Europe compiled by Deloitte Czech Republic, the number of Czech companies in the top 500 has gone up from 80 last year to 84. Škoda Auto took third place in the CE TOP 500 list of companies from 18 Central and South Central European countries with the greatest overall yearly revenue. A total of six Czech companies made it into the top 30 slots on the list. The biggest firms in the region saw a 9.8 percent rise in profits year-on-year. The total profits of the Czech companies on the list rose by 18 percent to 120.3 billion euros, which makes up 17 percent of total business revenue in the region.
Difficulties with foreign employment irks investors
Half a year after the Czech Labour and Social Affairs Ministry began introducing much stricter policies affecting hiring of non-EU nationals, investors and international companies are becoming wary of entering or expanding on the Czech market. Claiming that Czech workers need to be better protected on the local job market, the ministry introduced more complex and costly procedures for validating vocational qualification for foreign workers, and making it practically impossible for low-qualified workers from outside the EU to enter the job market at all. This is raising concerns from international companies like IBM or PricewaterhouseCoopers who claim they will reconsider starting new projects in the country. Providing necessary verifications of future employees’ professional qualifications from abroad may cost a company anywhere between 10 and 100 thousand crowns. It has become more difficult to hire new qualified workers from abroad, but also to fill those positions with Czechs who would be equally qualified. Czech and foreign-owned factories are also suffering because of insufficient local workforce to fill low-qualified positions.
Number of personal bankruptcies in 2012 at historic high
The number of declared personal bankruptcies in the Czech Republic grew by 30% in August from the previous month. The August figure was 1628 people, which is 53% more than the number of personal bankruptcies a year ago. According to analysis results released by the Czech Credit Bureau on Thursday, this is the highest number of bankruptcies since a new law was introduced in 2008. The number of bankruptcies filed in the eight months of this year make up a third of all bankruptcies since 2008.