Daniel Münich: The Labor Market in the Czech Republic. We Are Getting into a Rut, Again

We know nothing about the people who came here due to the war in Ukraine, and that is a big mistake, says an economist Daniel Münich in an interview with Robert Schuster. He thinks that one of the biggest problems is that many young Ukrainians linger in an “educational vacuum”.

How has the Czech Republic fared so far, in your opinion, in handling the influx of refugees from Ukraine? It has been, after all, a totally new experience for its people and state institutions…

The first and second stage went down unexpectedly well, we have seen a welcoming public and flexible state institutions able to come up with legislative solutions on very short notice, and coordinate effectively on the governmental level. To be completely honest, I did not quite expect that our civil service would be capable of such an effort. When it comes to public reaction, there was an unbelievable solidarity and understanding – something completely different from what we saw during the migrant crisis of 2015. Yet we are beginning to hit quite a few snags.

Now the focus must be on standardisation of processes and situational monitoring, as we ought to implement at least a partial integration of newcomers – no one really knows how long they will stay here.

We are beginning to be stuck in a rut, when we have stopped being able to come up with new, innovative solutions.We are not seeking real-time feedback and monitoring of the situation on the ground, we do not know what the new and real problems are.

It may be that the state institutions do not want to see the problems. It mainly concerns integration of Ukrainian children into schools and how their parents, mainly women, can find work. I feel it is beginning to function similarly to how Czech bureaucracy typically deals with everyday issues for its own citizens.

Is it possible to gauge now how the immigration from Ukraine has influenced Czech labor market? 

I am used to working with data and I base my conclusions on facts. Right now, there is a liability in the Czech system as it has not been able to process data flows to paint the current situation correctly. It mainly affects areas of education, employment and housing. We are in fact unable to determine how many Ukrainians are here and how many have already left. Hard data are, unfortunately, missing. The only exception is a survey done months ago by a private agency PAQ which interviewed a sample of Ukrainian families. It is a one off and it does work that should have been the state’s remit.

The simplest of data accessible from the Ministry of Employment and Social Affairs enable us to track the number of people, based on nationality, who are officially registered to be working, in employment. Before the war, the ratio was heavily in favour of men, about two thirds compared to one third of women. Now the current migration wave has completely levelled that up. The PAQ research shows that the majority of these people work through agencies or do badly paid short term work and so on. Many are, surely, paid under the table without any further security. The Ministry of Labor has come up with a figure of 50 thousand of them having found work – most likely unqualified and inadequately paid.

And when it comes to the qualified workforce in IT that has been traditionally very strong in Ukraine? Have they found work here? Are companies actively seeking them?

Sadly, we don’t even know what qualifications the immigrants have. They are mostly women who work in social care, cleaning services or as unqualified help. Yet we cannot find this data in official statistics, it is only a guess.

A big test comes in September, in the form of a new school year. What are your expectations? Will the Czech school system handle it?

Judging from the few data available over the summer break, the situation is certainly not very rosy. Many Ukrainian young people, mostly high schoolers, stay outside of the Czech educational system and are left in an educational vacuum. The authorities have their hands full trying to provide elementary and middle school education, not to mention preschoolers. The main discord in the capacities of schools and kindergartens is in the locations already known for having troubles to provide services to local populations.

This results in pressure to set up classes for Ukrainians only. Sometimes this ends in so-called adaptation groups which were meant to be only for initial orientation. The system is set up in such a way that it is up to the municipalities to deal with it. There are towns where ‘problems’ are concentrated and there are ones which are virtually untouched by the crises and thus prefer to have nothing to do with it.

Municipalities often do not even apply for housing assistance and subsidies as these come with many strings attached. There is no governmental information campaign directed at municipalities, not even a motivational one. Those who simply “drew the short stick” are then left to deal with the consequences.

It is also necessary to point out that Ukrainians have flocked to locations with a strong pre-war Ukrainian presence, i.e. where employment opportunities are but not necessarily where there is enough capacity in schools – typically in satellites around Prague and other big cities.

Are these problems result of a rapid influx of a great many people over a short period of time or do they point to more fundamental structural problems of the state?

Data collection has been problematic for a long time, for example in providing services to schools in disadvantaged localities. What is more, the state administration suffers from extreme compartmentalisation – Ministry of Labour cares only about employment, Ministry of Education about schooling, Ministry of Interior only about security aspects and registrations of residency. Their cooperation is very limited even in data mining and sharing. If the integration of children is to be a success, their parents need a place to live. The parents – mostly mothers – can go to work or training facilities only when their child has a school or kindergarten placement. And sadly, very often these things are not in sync, yet it would not take much for them to be.

Can this lead to an impulse to change things for the better and to improve coordination and communication among various state institutions?

It is hard to see how. It all goes hand in hand with how slow and out of date our governance system is. For years now, even decades, it is in need of a serious overhaul for which the political representation has not had either strength or time, for there has been one crisis after another. The state administration has demonstrated its limited capabilities, and not only in the case of covid or migration. It concerns setting about the reforms of taxation, pensions, and public finances as a whole. I get a feeling that many of the politicians who last year came newly into the Parliament and into state administration are very surprised at what can pose as an impossible problem.

What do you think Ukrainian refugees make of it, seeing how things often do not work here? Will they feel like staying on?

Majority of Ukrainians are relatively hardened, shall we say, used to an entirely different scale of state and governmental dysfunction than what they encounter here. From their perspective, our state institutions work relatively well, yet we are not overly strict, so one can lead a problem-free life without a ton of paperwork etc.

We do have an immense number of laws and regulations, yet rarely anyone bothers to learn them all and we tend to let quite a lot of things slide. In other words, most people can get by without really following the letter of the law, many of them making a living in the grey economy.

No one really minds unless they attract attention in some negative way. It can still be a better life than in today’s Ukraine. It is especially true if they already have some sort of social network here, friends or relatives to lean on. That would also prevent them from moving on to the West, as they are lacking the same support network there. It is absolutely crucial for them to have that because these networks supplant the role of state – instead of its institutions it is friends and family who help out with finding work, looking after children etc. – and that plays a decisive role.

Some day the war in Ukraine will end and the country will need every pair of hands to help with reconstruction. Do you think they will want to go back?

Here we come at the collision of two tendencies – brain drain and integration. The better they are  integrated into our society, the less likely the war refugees are to return and to help rebuild Ukraine. Yet we do not know how long the war will go on. If we are to learn that it will last a long time, then the integration efforts will be stepped up, for currently they are sort of on the back burner. If the combat is to wind up by the year’s end and there will be billions in foreign aid channeled into the country, then it does not make much sense to develop a profound integration strategy.

I am of the opinion that these people might be here for a longer haul and in that case it will help Ukraine as well, as there will be large remittances sent there.

It does not only concern financial transfers but know-how as well. I do think that this community, by staying in here and being close by at the same time will aid the reconstruction as well.

Could it be that the Ukrainians who stay here and integrate well can become the “critical mass” that would positively influence economic growth in the Czech Republic and mitigate the lack of workforce that has always been called the biggest hindrance of further economic growth?

If the situation does not dramatically change and the numbers stay what they are now – there are roughly 300 000 people here, most of them women and children. Realistically, we can add between 50 000-70 000 people to the Czech labor market, which amounts to about 5 million people. From that we can see that it is about 1-1.5 percent – so it will not make a big dent. If their children do grow up here, and will be, hopefully, integrated and educated, then we shall add another 1 percent – all in all, not very dramatic numbers that could sway the situation on the Czech labor market.

So there will be no effect at all?

I think that many consequences will not be registered at all, regardless of the fact whether the integration process is going to be a success or a failure.

There simply does not exist a system in the Czech Republic designed to evaluate how the integration process pans out. 

How successful the integration will be depends on whether or not the Ukrainians are fulfilling their potential and are working as productively as they could, either in positions adequate to their capabilities, managing  to integrate successfully as scientists, IT workers, etc., or end up doing some menial work because they lack a stamp showing they have graduated from high school.

Yet we have no way of knowing that, as we lack any data about them, so we do not know how they contribute to GDP, tax revenue and so on. I am afraid that the Czech system has no idea how to gain insight into that and we will only be guessing.

What would need to change to have that data available?

Integration and its success rate can be well tracked with young people, how they go through the educational system and what their results are. On the labor market, there could be traceability of Ukrainian employees, their original qualifications and current employment. This would, of course, mean that someone is systematically and regularly collecting this information, preferably once a year, or is monitoring a sample of people for a few years – which is a common practice in the world. Well, we will be very lucky to know how many of these people are really employed. There needs to be a demand for this data though, and governments do not request it.

I am also surprised that neither the government nor the parliament get a regular monthly analytical report concerning the development of Ukrainian situation in the regards of integration – labor market, education, health care etc.

If I were in a position of a Prime Minister or a Parliament Speaker,  I would certainly demand such a report. We went through something similar during the covid crisis and it took some repeated insistence for MP’s to get relevant reports. When it comes to Ukraine crises, nothing is really happening, with the exception of mayors who have to deal with it on a daily basis – as if no one really cares.

I do not understand why there is no requirement for Ukrainians to register for permanent domicile, even though it is mandatory for every Czech citizen – without a domicile one cannot obtain passport, health care and insurance, employment, education, bank account etc. Vast majority of Ukrainians need something similar. Why not have the same rules for them as for the rest?

The local municipality would confirm once in a month or two that they are still present on our territory. By the way, during summer, many things have become standardised, various temporary solutions and exceptions have run their course. Ukrainian migrants will be viewed far more strictly in the eyes of the law now.

Are you then rather a pessimist when it comes to Ukrainians in the Czech Republic and their standing here….

The more real-world information I get, however partial, from mayors mainly, the more pessimistic I am about the success of the integration. I also think that failures will not be highly visible, so as it is in the saying “ Out of sight, out of mind.”

Daniel Münich

received his Ph.D. in economics from CERGE at Charles University. He has served as the Executive Director of the academic think-tank IDEA at CERGE-EI since 2012. Apart from teaching, he focuses on research in the fields of labor economics, economics of education and schooling, policy impact evaluation and R&D assessment. Among other things, he was a member of the National Economic Council of the Czech Government NERV II where he coordinated a chapter on education. He has served for many years as a senior adviser to the European Network of Economists of Education for the EU Commission, and is a leader of the national team in the European project Euromod. Daniel is also a member of the advisory board for policy impact evaluation to the legislative council of the Czech Government.

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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