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2007:4 Czech Labour Market: Changing Structures and Work Orientations

Jiří Večerník (ed.)

‘The Adjustment of the Czech Labour Force: Changing Job Structures, Wage Disparities and Work Orientations’ is the title of a project that set out to use various data sources to describe changes in the field over the past decade. A collection of studies on various topics provides a multidimensional picture of the changing Czech labour force and its ‘state of mind’ and identifies some key problems. In the first chapter, the Czech labour market is observed in various perspectives. The authors begin by describing the specific stages of the development of the labour market in the 1990s and go on to observe the changing composition of the labour force, labour mobility, and vulnerable categories of people. This is followed in the last section by a description of policies, especially active labour market policies, and of the flexibility of the labour market in its various forms, concluding with a discussion of some problems of further development. In the second chapter, the authors draw on income surveys covering the period 1988-2002 to illustrate the changes in inequality of earnings and household incomes, the main factors behind their disparities, and the connections between these two distributions. The third chapter looks at the gender wage gap in the Czech Republic. The fourth chapter examines the transformation strategies of Czech agriculture after 1989 in the light of several case studies. The fifth chapter focuses on the dynamics of grand entrepreneurship, examining its roots and further development. The sixth chapter investigates changing work values and job attitudes between 1997 and 2005. The Appendix contains texts documenting the changes to occupational structures over time and cross-nationally in a comparison with EU countries.

Keywords

Labour market, occupations, earnings, entrepreneurs, farmers, gender gap, work values, Czech Republic

Summary

The evidence on the labour market and labour force in the Czech Republic is extensive but not integrated. Surveys describe relevant characteristics separately and do not provide a complex picture of human resources. In particular, “hard” statistical data are not related to “soft” attitudes. Such complex information is needed for monitoring the adjustment of the labour force to the knowledge-based and dynamic society which is crucial for competitiveness of the Czech economy. The project “The Adjustment of the Czech Labour Force: Changing Job Structures, Wage Disparities and Work Orientations” aimed to use various sources – statistical and sociological surveys, case studies and others - to describe changes between mid-1990s and 2005. Studies on various topics are collected here to provide a multidimensional and dynamic picture of the changing Czech labour force and its “state of mind”, together with identification of some key problems

In the first chapter, Czech labour market is observed in various perspectives. First we focus on the specific phases of the labour market as it developed in the 1990s. Second, we observe the changing composition of the labour force and labour mobility. Third, we examine the vulnerable categories of people. Policies, active labour market policies in particular, are described in the fourth section. Fifthly, we analyze the flexibility of the labour market in its various forms. In conclusion, several questions regarding the future of the Czech labour market are raised: predominant montage character of the Czech economy and labour force, weak work commitment, growing differentiation of the labour market and a weak legal and institutional environment of business and employment.

In the second chapter, we draw on income surveys covering the period 1988-2002 to illustrate the changes in inequality of earnings and household incomes, the main factors behind their disparities, and the connections between these two distributions. The first part suggests a systemic change occurred, leading from the application of the “need principle” to the assertion of the “market principle”. In the second part, the changing importance of individual factors of earnings in favour of education and occupation is demonstrated. In the third part, the intermediating structures between earnings and household are presented and income packaging is analyzed. Under transition, more income is collected from the labour market and more of it is redistributed by the state. Instead of demographical factors, education became the principal axis of the entire process.

In the third chapter, gender wage gap in the Czech Republic is concerned. If the individuals base their decision to participate in the labour market on their potential wage, the low-wage workers would probably chose to stay out of the labour force. Therefore, the gender wage gap can be biased due to this. This contribution estimates the wage functions for men and women and examines the structure of the wage gap. The applied decomposition denotes the several effects that form the gender wage gap, e.g. the endowment effect which stems from different individual and job characteristics, the remuneration effect which is caused by different remuneration of these characteristics and also selection effect which reflects the potential wage gap that would occur if the non-participating started working. The new and richer data source (2005 EU-SILC survey) provides a number of individual characteristics of working as well as non-working individuals.

In the fourth chapter, transformation strategies of the Czech agriculture after 1989 are considered. Transformation started with both advantages and disadvantages for the sector. The former include the existence of large-scale farms, relatively highly skilled workers and a cheap labour force, which make Czech agriculture competitive on the European scale. On the other hand, attitudes to work and respect for the property of other people were poor, production efficiency and quality were low whereas the expectations of farmers were high. The research presented in the chapter covers different socioeconomic strategies of transformation chosen by Czech or foreign investors. Homeland entrepreneurs have usually opted for relatively strict, unsocial win-win strategies and understand their business simply in terms of material profit, or they were not successful at all. Conversely, western businessmen active in the country value long term profit, social ties and the symbolic functions of the peasantry more highly. The main current problem of local agriculture can be seen in the absence of family-type farms rooted in the local and social environments. This fact poses the threat of the development of a ‘two-speed’ European agriculture, the western model combining both small and “industrial” farms, also benefiting from the generous subsidies, and the eastern model focusing solely on large-scale farming.

In the fifth chapter, the rise of grand entrepreneurship is focused. It is argued that the peaceful transition to capitalism in communist countries was not possible without the co-action of the nomenklatura, whose interest was to transform their informal access to state-owned capital into an authentic ‘grand entrepreneurship’. The necessary acquisition of physical capital was achieved by means of mass privatisation schemes in which the nomenklatura took advantage of their social capital and information. In Czech case, there were three social groups competing for a position among the new entrepreneurial elite. The initially large gains of the nomenklatura gradually eroded when new businesses opened to domestic and international competition, where competitiveness depended on endowments of human (entrepreneurial) and economic capital. In the subsequent wave of ownership restructuring, the former nomenklatura was partially squeezed out of the tradable sector, which was occupied by better skilled foreign and domestic entrepreneurs. The exiting entrepreneurs converted their holdings into consumer goods, or defected to sectors less open to competition, where the alignment of social capital and bureaucracy persisted.

In the sixth chapter, changing work values and job attitudes in between 1997 and 2005 are investigated. The chapter is conceived as a contribution to a critical reading of opinion data and the presentation of ISSP modules on ‘Work Orientations’. In the first part, some methodological problems regarding inspection of work and job values are presented using examples drawn from previous research abroad. In the second part, the framework of systemic transition is set and hypotheses are presented regarding work values and attitudes from the perspective of gender and age, education and occupation. In the third part, a comparison is made of people’s expectations regarding their work and jobs with their perceived fulfilment. In the fourth part, we consider the perceived location of workers between distant worlds of family and firms and inspect factors of work and job satisfaction. In conclusion, we discuss the role of subjective perceptions in the economy and the question of a ‘true’ change in values during the transition.

In the appendices, we challenge the problem of comparison of occupational structures over time and cross-nationally. In fact, the problem is pending despite effort of international organizations and research teams. Thus the analysis is limited on broad branch and occupational categories only and provides a rough picture of development and Czech specificities in the area. The comparative EU-SILC data, containing information on occupational, branch and wage structures (available only in late 2007) enable to analyze the labour force multi-dimensionally.