The ILO and Czechia

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    About the ILO in Czechia

    Strong Government response helped to mitigate labour market impact of the pandemic

    Czechia was among the first countries in Central and Eastern Europe to transform its political and economic system after the fall of the Iron Curtain. The country is considered as one of the most successful states in making the transition from a centrally planned economy to a social market economy. Since the early 1990s, growth has been strong, though volatile, driven by opening markets, inflows of foreign investment supported by a competitive industrial base, a favourable geographical location, and a skilled workforce.

    The rapid transformation led to EU membership in 2004 and the classification as high-income country in 2006. Income convergence with EU has made significant progress and national income per person is at 93% of the EU average, the highest among post-socialist EU members. Czechia has the lowest unemployment rate in the EU and OECD (below 2% in 2019, 2.6% in 2020, trending towards 2% again in early 2022). Low unemployment levels push wages upwards. With employment rates approaching 80%, the country has been facing increased labour shortages that could become a major growth hurdle. The country also performs well on other social indicators such as low income inequality and a small share of people at risk of poverty (9% vs EU average of 17%). Continue reading