Jiří Švejcar: Continuous Training and Education Raises Productivity

The Czech labor market will have transformed radically by 2030, some jobs will disappear entirely and approximately 330,000 people will lose their jobs, Jiří Švejcar says in an interview with Robert Schuster.

How is the Czech labour market doing? What are its strengths and weaknesses?

Our study focuses on the future development of the market. We already know today that there is a demand for almost 200,000 workers. These figures are based on the data we obtained from career sites. The numbers stated by employment offices are much higher because they are inundated with fake job offers.

It is worth noticing that certain sectors show a higher demand for workers than others – such as manufacturing, which has historically been a very strong sector in the Czech Republic. Looking into the future, we have to expect some changes in the economy. There are a number of tendencies that are bound to influence it. We pinpointed ten key trends relevant for the Czech Republic. These include a transition towards “a green economy”, a circular economy, a sharing economy, large-scale digitization, automation, ageing of the population, electromobility, a shift from industry to the sector of services and Big data.

We made an estimate as to how this will affect the economy. Our starting point was the current two percent growth rate. Based on the trends mentioned earlier, we calculated the impact on productivity and size of the industry sectors. Thanks to this, we know the current structure of professions. Using the database of the Ministry of Labour and Social Affairs, we were able to create a detailed model of its development.

What we found out is that by 2030, there will be as many positions to be filled as there are now, but the requirements for the positions available on the labor market will change radically.

Our study encompasses the whole of the Czech Republic; it did not differentiate the data based on gender, region or town. The result estimates that in 2030 there will be a surplus of doctors. The study does not take into account, however, that in some regions there has been a higher concentration of doctors while other regions do not have enough of them. There is a great deal of space for improvement of healthcare in some regions. Today’s situation is the result of the enormous amount of overtime the doctors are working, which is not a desirable model.

As for the megatrends important for the future of the Czech Republic, in which areas are we doing well, where could we do better and what are our greatest deficiencies?

The environment, green energy, mobility, recycling, circular economy – these areas are still underdeveloped and not much progress is being made there. As for the carbon neutrality goals, we will have to accept them because they are part of the EU regulations and as such are binding for the member states. The businesses that are going to be impacted the most will have to make an effort in that department for another reason – they are part of supply chains in Germany and other countries of the EU. So despite the fact that not much is happening at the moment, this area will definitely have to undergo some changes. Greening of the economy will become a powerful moving force of the future, especially in connection with solar power stations and the price of gas, which is very high at the moment. Then there is the lifestyle trend, which means the economy will incline more towards the service sector and further away from other sectors, such as agriculture or manufacturing. Finally, there are those megatrends where we are able to keep up quite well and which are moving forward. Among these are digitalization, e-commerce, automation, AI and so-called Big Data.
You put an emphasis on employee training and education. How can we make it a more common practice? Your study shows the Czech Republic lagging behind in comparison with other EU states.

If we are talking about upskilling, it has been proven by several Nobel Prize winners that there is a direct link between continuous education and work productivity. And I do not mean just education in schools because it applies to any form of continuous education. Even just learning a foreign language or knitting or learning any other skill.

The number of people who regularly undergo training or learn new skills is less than 6%. In the EU it is 11% and in the most successful countries, 25% of people regularly undergo training. I believe that personal motivation is key, but the state can help as well. The most important areas we need to focus on are digital literacy and language skills.

If we look beyond our borders, we can learn of several ways of achieving it. For example, we can put into law that employers have to provide their employees time off for training and education and we can motivate businesses to offer it as well. We can also establish regulations under which businesses have to report how much time they invest into worker education. This can also play a role in where people choose to work. How much the company cares about your development and how much it helps you prepare for changes that are bound to happen can become one of the major criteria in picking a job along with salary and location. If the company does not care at all, it will limit you or even impede your future development.

Many businesses have strong unions and education could become one of the things they fight for. They could, for example, achieve an increase in the company’s education and training budget through collective bargaining.

There are also provisions focusing directly on employees, including financial bonuses or discounts for courses and classes. You can directly fund the improvement of individual qualifications, provide tax cuts, etc.

Do you know why there is so little willingness to pursue further education in the Czech Republic?

I personally think that it is a combination of two things. On the general level, I believe it is the legacy of Communism. Back then people had a guaranteed job and did not need to educate themselves. The other reason is a bit of a paradox. I think that the high-quality Czech dubbing in movies actually worsens our foreign language skills. It prevents people from encountering English automatically and naturally. Some European countries have managed to integrate a foreign language, especially English, into ordinary life much better. We, on the contrary, have created a little ten-million island of people who speak Czech and who are to a certain extent limited by it.

How common is it for Czechs to feel ashamed or humiliated when they lose their job?

I do not think that people who lose their job are completely paralyzed. A bigger problem is that if they do not manage to find a new job quickly enough, it may take them a year or two. Their employability – their ability to find work quickly – drops rapidly and they lose motivation to keep looking. Another hugely important factor is the employment office. It should provide services focusing on the individuals, to help them develop. We also need to mention that there is a great deal of prejudice that completely lacks any foundation, for example, that employing people from the 50+ age group is a risk because they will not invest enough time or effort into their jobs. This is not true at all. These people no longer have small children, they do not have to take care of anyone and they can focus fully on their job. Offering more part-time jobs would be a tremendous help in getting these people employment.

Over the past several years, it has become more and more popular for Czechs to take early retirement. In Western Europe, the percentage of people who work even after reaching the age of retirement is much higher.

The reason why they do it is exactly because they can work part-time and can stay in contact with the workplace. We do not really have that here. So it will be a major task for businesses to create the necessary conditions for bringing this into practice. Once they find out how it works, there will be no need for any regulations. Making part-time jobs more common will require much more support from the state either way. In the Czech Republic, people in the 50-60 age group working a part-time job make up 8% of all jobs, while the EU averages around 18%.

The last two years have been marked by the pandemic. People were working from home, schools taught online – all of that strengthened one of the main megatrends of the future. Did the pandemic paradoxically help to speed this process up and push us forward?

I do not think so, because those people who started working from home were people with office jobs and they merely started doing them remotely. It did not improve, however, the digital skills of the overall population in any meaningful way. Besides, the offices stayed open so anyone who wanted to go there in person could do it. What we are missing is a wider awareness campaign to motivate people to start making use of the digital alternatives. One of the reasons why that is not happening is that it remains quite difficult to register into the Portál občana (Citizen’s portal) system, which puts a lot of people off.

We know that in approximately 54% of jobs you need some basic digital skills for everyday work. This number will surpass 90% after 2030. We’ve calculated that more than 2 million people will need training with digital tools.

Schools can help us to a degree – that would be some 900,000 people. But there are still more than 1,000,000 people left who will have to learn these skills elsewhere. Some of the training will take place in the workplace and will be provided by the employer, but most people will have to take various courses and learn by themselves. This is already happening to an extent, there is a growing market for these kinds of activities.

Which professions are endangered the most according to your study? When should the current forty-year-olds expect such changes and start preparing for them?

It’s not just about forty-year-olds. The most endangered professions are those, where the majority of jobs will cease to exist. There are almost 1,000,000 of them. One out of three people will lose their job which means that their current education and work experience will not be able to get them a job like today. Factory workers in manufacturing will be the most affected group, a quarter of these jobs will disappear due to automation.

Other groups of people who will lose their jobs are certain service providers, such as financial or insurance brokers, which will be caused by digitalization. Automation will also affect retail. Other endangered professions include hairdressers, workers in foundries or lawyers.

We expect that 31% of hairdressers will lose their jobs. That’s because the schools have been churning out new ones while not enough are leaving for retirement. I am not in favor of massive regulations, so if you want to be a hairdresser, go for it. But you should be aware of the fact that in ten years, there will be 20,000 trained hairdressers more than the market will need. This should be regulated on the level of high schools and vocational schools. Some vocational schools keep accepting large numbers of students even though the demand for these professions is fairly small. 

What about workers in car manufacturing? This industry plans to focus mostly on electromobility, which will require a completely different type of worker with different skills than they have now, won’t it?

This profession as such is in no danger at all. Car manufacturing will still require workers. But the requirements and the character of their work will change. It should be up to the employers to solve these issues; they have to prepare their workers. These changes will affect a million people.

Many of the things we’ve talked about need a top-down approach – a government intervention. It is often obvious that governments can’t see beyond the horizon of one term of office, but the labor market changes will require a long-term strategy and at least some general agreement. Is it even possible here?

The fact that our state does not have a vision or a strategy, which is something most successful countries have, is a major problem. We should not forget, however, that the last two years have been anything but normal. As soon as the governments had dealt with Covid, the war in Ukraine broke out and ushered in an energy crisis. So I understand that the government focuses on helping people here and now. At the same time, we are witnessing an immense debt ratio; we are more in debt now than we have ever been before. The worst part is that people are beginning to accept it as normal. By the way, raising work productivity, education, higher employment rate – all of that can help us significantly.

Its effect on the economy would generate 600 billion Czech crowns in 2030, if we could fill the lack of positions. There are a number of ways to achieve this. But someone would have to come out and say that we need a long-term plan.

We’ve collaborated with the Ministry of Labour and Social Affairs, Ministry of Education and others and I believe that they realize how important this agenda is. But to push this through on the highest level and incorporate it into real policy, we will need to generate a great deal of pressure and citizens and voters have to be a part of it.

How much has the war in Ukraine and the influx of refugees impacted the Czech labor market?

That will depend on how many Ukrainians are going to return back home. Looking at history, in crises such as this one, approximately 50 to 70% of people would return. If we apply the numbers to our situation and if we wanted to fill all the vacant jobs, we can conclude that it would be possible to accept and invest into 520,000 people. That is in case only 30% of refugees return to Ukraine. Given how Eastern Ukraine has been devastated, I think that’s a likely scenario. It will also depend on us, on how we will be able to integrate them. The most important thing is to find them jobs appropriate to their qualifications.

We can often see very qualified people working low-level jobs, which makes no sense. Such a person is unfulfilled and has little motivation to stay. We could amend that by recognizing their degrees and recognizing their qualifications from Ukraine.

Then if you add intensive language courses, they could use their qualification in the labor market. We would have to solve a number of practical issues too, for example that the refugees are often women with small children who need to be taken care of, who need a place in schools. The better environment we create for them, the better they feel here, the more probable it is they will want to stay here indefinitely. There are many ways in which this approach will pay off significantly, for example on what they will pay in taxes.

Jiří Švejcar

is a partner at the Prague office of the Boston Consulting Group (BCG). For over forty years he has been working in strategic counselling for top management. Between 2003 and 2015, he worked at Accenture, where he led strategy for financial institutions for the Central and Eastern Europe region. Since he started working in the BCG in 2015, he has focused on digital transformations of financial institutions. He is also the head of the digital technologies and data sector. Aside from commercial projects mainly in the financial and energy sector, he also pursues pro bono projects in the social sphere.

Robert Schuster

is the managing editor of Aspen Review Central Europe. He was the editor-in-chief of Mezinárodní politika monthly from 2005 to 2015, and a correspondent for the Austrian daily Der Standard in the Czech Republic from 2000 to 2012. He has been a foreign correspondent of Lidové noviny daily since 2015, where he covers news reports from German-speaking countries. He is a regular guest in commentaries broadcast by Český rozhlas Plus.

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