CzechInvest Information Series No. 10
Serial No. LAB/11/94-10
Date of Issue November 17, 1994
For the foreign investor, the Czech Republic (CR) can offer an increasingly large, highly skilled, and cost-effective workforce.
With an average monthly wage of US$222 (1993 average), the cost of labour is lower than in either Hungary or Poland.
For foreign firms in the CR, payments for employee insurance are lower than in either Hungary or Poland.
The movement toward a competitive free market economy has encouraged efficiency measures and personnel streamlining, creating a pool of available skilled labour.
The CR has a history of high industrial productivity, as the seventh largest country by GDP per capita before the Communist regime.
As industry continues to become privatised and more efficient in 1994, the 3-4% average 1994 unemployment rate is expected to double in 1995, releasing a significant quantity of skilled labour.
The working age population will continue to increase, from 51% of the population in 1993 to 53.7% in 1995. The percentage of people working past retirement age in the CR is among the highest in the world, surpassing that of either Hungary or Poland.
The Czech workforce is skilled and educated, with a 1992 literacy level of 98.9%. According to a December 1993 OECD report on education, the CR produces a higher percentage of science and engineering graduates than any other country in the world.
The CR's domestic workforce comprises 51% of the 10.33 million population - 5.3 million people. The official working age is 15-57 for women and 15-60 for men.
Wages
The minimum monthly wage in the Czech Republic is US$80. As of December 1993, the official average monthly wage was $222. Comparatively, the official average monthly wage in Poland was $252 and in Hungary $342.
GROSS INCOMES FOR LOCAL STAFF WORKING IN JOINT
VENTURES AND WHOLLY -OWNED SUBSIDIARIES
OF FOREIGN COMPANIES
Position Annual
gross
salary
(in USD
1000)
CR Poland Hungary
Min. Max. Min. Max. Min. Max.
General Manager 16 27 30 60 40 87
Finance Manager 12 23 30 45 28 58
Sales and Marketing 12 21 30 45 30 52
Manager
Personnel Manager 10 19 15 26 20 46
EDP Manager 10 16 15 23 17 35
Field Staff 5 8 8 19 14 27
Accountants 4 8 19 34 17 29
Secretary Assistant 4 7 5 11 9 15
Note:
maximum figures apply for the Prague area; the minimum figures hold true for all other parts of the CR
maximum figures apply for Warsaw and Budapest. Outside the capitals, salaries are 15-30% lower.
Statistics courtesy of the Price Waterhouse 1993 Wage Survey
BASE MONTHLY SALARIES PAID BY INTERNATIONAL
COMPANIES OPERATING IN THE CR (in USD)
Occupation Lower Median Upper State Rates*
Quartile Quartile
Equipment Operator 175.00 200.00 285.70 125.00-177.21
Warehouseman 196.43 250.00 374.25 133.92-177.21
Computer Operator 207.14 221.43 242.86 118.28-162.50
Bookkeeper 228.57 258.57 382.68 125.00-177.21
Shipping/Receiving 267.86 420.96 560.00 250.00-500.00
Driver/Courier 270.21 357.14 357.14 111.61-147.75
Junior Sales Rep. 307.14 412.50 565.46 133.93-191.96
Jr. Technician 357.14 428.57 464.28 133.93-191.96
*State-owned operations
Czech Republic wage statistics courtesy of the Coopers a Lybrand 1993 Czech Republic Wage Survey
Insurance
All foreign companies registered in the Czech Commercial Register must pay a total of 35.25% of their Czech employees' gross salaries toward social security and health insurance funds. This compares to mandatory contributions of 48% in Poland and 52.5% in Hungary.
MANDATORY EMPLOYER BREAKDOWN OF EMPLOYER
INSURANCE CONTRIBUTIONS CONTRIBUTIONS IN THE CR
Statistics courtesy of Price Waterhouse-Budapest, Price Waterhouse-Warsaw,
and the Coopers a Lybrand 1993 Czech Republic wage survey.
The following information was collected by Coopers a Lybrand and KNO Worldwide through their January 1993 study of 30 international companies operating in the CR and employing Czech citizens across four major industrial and service sectors (consumer sales, finance, industrial sales, and services).
Companies polled anticipated 15-600% overall sales growth in 1993
Average employee turnover was estimated at only 7%/year
Trade unions were found to be generally passive. Those managers polled expressed doubt over employee interest in forming collective agreements.
The study found high levels of motivation among Czech employees. Professional and upper-level staff were found to consistently work over 50 hours/week; sales representatives and technicians averaged 50-70 hours/week; and in-house support staff worked 45-55 hours/week.
Employee contracts must be in compliance with the Czech Employment Labour Code. In most cases, this responsibility was allocated to an in-house finance manager. Other companies consulted attorneys, hired full-time personnel administrators, or subcontracted organisations specialising in personnel and payroll administration.
Over 70% of inward investors in the former CSFR were able to establish incountry training programs, covering English language, technical training, and management and finance skills.
The Coopers a Lybrand and KNO Worldwide study also identified a variety of approaches used to train (or retrain) Czech employees in necessary job skills:
On-the-job: this approach was used among all companies in the study by pairing new (or promoted) employees with experienced workers to learn while on the job. This is typically combined with periods of formal training.
Training classes abroad: although this approach introduces travel and lodging expenses, it was found useful for training key staff with international experience and company-specific technical or operations training. Almost always presented in English or German.
Corporate classes: as a less expensive approach, many companies conducted these classes incountry. Generally, an instructor from a European branch office customised the classes based on interviews with the trainees. The study found this approach most effective with technical subjects that require small audiences.
Training internships abroad: found especially effective for training management or key professional employees. Usually held in a European facility for three to six months, this approach gives the employee hands-on experience which can then be brought back to the incountry office. This approach does involve travel expenses, however, and also requires participants to have advanced language skills.
University or technical institute: for vocational, technical, or university training. The study found this approach effective for securing literacy and mathematics skills. Also reliable for engineering and science training. Usually presented in Czech.
Management centres: sometimes funded by western aid or government grants. This approach often teams Western and local teachers together as instructors, providing everything from full MBA programs to company-specific classes. French food company BSN and its partner, Nestle, used this approach after acquiring Cokoladovny, the formerly state-owned chocolate company.
Contract training firms: private companies which develop either public or company-specific programs. Can run from one-day in-house sessions to two weeks at an off-site facility. These companies may also assist in translating and modifying corporate programs to meet specific incountry needs. Prices vary greatly, and are not always indicative of corresponding quality. Sessions may be given in any language.
Public workshops: offered as either conferences of single-topic workshops through a variety of agencies. Can focus on anything from secretarial skills to finance and business strategies. Vary greatly in price and can be offered in any language. Many companies found these to be good supplements to company training programs.
Individual initiative: most companies in the study provided some tuition reimbursement for classes taken after-hours to improve skills.
Since joined by Volkswagen, Czech automobile company Skoda has reoriented its management training procedure toward new Western resources and demands. Using a system called "tandem management", two managers of different nationality -- Czech, German, or English -- are assigned to work together in one position, thus exchanging knowledge and training. Czech managers are also exposed to several of the aforementioned approaches, including training internships abroad, seminars at the European Business School in Prague, and company-specific in-house courses.
NOTE: This information is current as of November 1994. Although we have made every effort to ensure the reliability of our sources, CzechInvest does not assume responsibility for its accuracy.