The ILO in Czechia

The Czech Republic became an ILO member in 1993. The former Czechoslovakia was one of the founding members of the ILO in 1919. The country has ratified all the fundamental and priority governance conventions. Latest ratifications concerned the Collective Bargaining Convention, 1981 (No. 154) and the Maternity Protection Convention, 2000 (No. 183) in 2017. 

The labour market situation 

The rapid transformation of the Czech economy led to EU membership in 2004 and the classification as high-income country in 2006. The Czech Republic has one of the highest levels of income per head in central and eastern Europe. However, the competitiveness of its industrial base, which specialises in cars and machinery, is being called into question by rising costs and the green transition.  

Czechia continues to have the lowest unemployment rate in the EU and OECD with 2.4% in 2022, as compared to the EU average 6.2% (Eurostat, 2024). Low unemployment levels push wages upwards. With employment rates approaching 82% in 2023 (Eurostat, 2024) , the country has been facing increased labour shortages that could become a major growth hurdle. The country also performs well on other social indicators in terms of income inequality (Gini coefficient 24.8% vs EU average of 29.6% in 2022) and the rate of people at risk of poverty or social exclusion (11.8% vs EU average of 21.6% in 2022). The low employment rates of women with small children, low-skilled and older workers as well as people with disabilities is a concern. The gender pay gap is one of the highest in the EU at nearly 18% in 2022, compared with 12.7% EU27 average (Eurostat, 2024). At the same time, a lack of skilled labour and skills shortages pose a significant barrier to further innovation and growth.  

The Czech Republic’s post-pandemic recovery has been slowed by the impact of Russia’s war against Ukraine on energy prices. The manufacturing-oriented economy is stagnating owing to a downturn in household spending in the face of record-high inflation. Real GDP is expected to contract by 0.2% in 2023 (EIU, 2024). Slowing inflation and rising real wages will help the economy recover in 2024 with GDP growth forecasted at 1.3 per cent (EIU, 2014). 

Cooperation between the Czech Republic and the ILO 

The ILO has assisted the country in its economic and labour market transformation and in its accession to the EU. Since 2005, Czechia has been a development partner of the ILO, providing funding for ILO projects in Moldova, Serbia, Ukraine, and Mongolia on labour market policies, labour migration, social dialogue, skills for persons with disabilities and inclusion of disadvantaged youth in the labour market. Czechia and the ILO further expanded this partnership by signing of a multi-year Partnership Agreement in 2016.  

Text last updated 07/2024