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Industrial Development in the Czech Republic

| Author/ Editor: Viviane Krauss / Isabell Page

Over 40% of the Czech labour force is employed in the industrial sector. The largest sector is the automotive industry. Most of the produced components are exported abroad - an important turnover factor for the Czech Republic.

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The structure of industrial production has changed in the last 20 years.
The structure of industrial production has changed in the last 20 years.
(Source: gemeinfrei / Pixabay)

Before the dissolution of the Austro-Hungarian Empire, almost 70% of the industrial production of the Austro-Hungarian Monarchy was concentrated in the Czech countries. When the independent Czechoslovakia was founded, it became one of the world's leading industrial players due to a strong development of the industry in Czechoslovakia. Even today, industry is still very important for the Czech economy. Over 40% of the working population is employed in the industrial sector. 1 The largest sector is the automotive industry. The Czech industry produces mainly electrical, electronic and optical equipment, as well as cars, transport vehicles and machines. Most of the produced components are exported abroad - an important revenue factor for the Czech Republic.

In order to keep the economic and industrial factors interesting for potential partners, an extensive infrastructure with excellent scientific centres has been established in recent years. With the know-how of the internal scientists, these centres serve as good partners for the Czech Republic. The Eastern European country has made a name for itself in areas such as nanotechnology, aerospace and chemical industry. Domestic companies were also created through these partnerships.

Automobile Manufacturer Grows on Czech Market

The structure of industrial production has changed in the last 20 years. The town Mladá Boleslav, a Czech town in the Central Bohemian region north-east of Prague, is the home of the main plant of the car manufacturer Škoda, the Czech Volkswagen subsidiary. In 2013, the plant employed 19,560 people, producing the highest numbers of vehicles. The automobile manufacturer also expanded into other Czech cities and even a development and design office is located at the private university Škoda Auto Vysoká škola. Several models such as Škoda Fabia, Škoda Octavia and Škoda Rapid are built in the plant, and three-cylinder engines and transmissions are developed and built in Mladá Boleslav. The company's own foundry enables the independent production of vehicle components. However, the great demand for employees in this and other companies can lead to problems.

The Biggest Economic Problem

In view of the good economic situation, skilled workers are in demand everywhere, although training is below the requirements of companies. There is a shortage of skilled labour in the Czech Republic today. In the current economic survey of the German-Czech Chamber of Commerce (AHK Czech Republic), investors ranked last for the third time in a row out of a total of 21 companies in the "supply of skilled workers" ranking.

Due to the excellent order situation compared to the previous year, several companies intend to hire more employees again. In the above-mentioned survey, almost three quarters (73%) of investors rated the current economic situation in the Czech Republic as good and 2% as poor. This trend is likely to continue according to the economic survey. Two out of five companies expect wage costs to rise sharply by more than 8%, more than half expect them to rise by up to 8%. This shows that the Czech Republic is slowly losing a major competitive advantage. Managers are also increasingly dissatisfied with the "qualification of employees" and the "vocational training system", which leads to long-term criticism. Rudolf Jindák, head of foreign policy in the Czech presidency, also described the shortage of skilled workers as "the biggest economic problem and a brake on growth". The Czech economy and society must be opened to capital flows and foreign workers. According to him, President Miloš Zeman is also aware of the extent of the problem of the shortage of skilled workers for the economy and is working on further measures. On the other hand, the shortage of skilled labour is proving to be an investment driver. In the chamber survey, companies have never been so enthusiastic about spending as in 2018.

References

1)http://www.czech.cz/en/Business/Economic-facts/Main-pillars-of-Czech-industry

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