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Increasing quotas for foreign skilled workers will help companies’ complete contracts and boost state budget revenues

Up to 20,000 skilled workers per year for IT companies, hospitals or construction companies. The government has approved measures from the Ministry of Industry and Trade aimed at supporting the arrival of skilled workers to the Czech Republic.

The Czech Chamber of Commerce appreciates that the Czech government has responded to the request of business organizations to increase the annual quota for foreign workers. It hopes that adjusting the government-regulated program will speed up processing applications for employee cards. The new workers will alleviate the decline in skilled labour caused by adverse demographic trends and early retirement. However, they will not solve the structural problem of the Czech economy, as employers are short of 300 000 employees and within ten years, there will be a shortage of over half a million of them on the labour market. However, the newly recruited employees will enable companies to complete contracts, increasing the state's revenue. According to the Chamber of Commerce's estimates, the budget will receive at least CZK 4.8 billion a year in taxes and levies on the labour of these employees alone.

"Given the unfavourable demographic development in the Czech Republic, it is clear that we will not be able to do without the help of foreign workers in the long term. However, it is far from being only manual work, increasingly, it is also highly qualified professions, which we cannot fill with our own resources in the long term. However, it is always necessary to think simultaneously about eliminating social and security risks," said the President of the Chamber of Commerce, Zdeněk Zajíček. "We must not resign ourselves to creating even more favourable conditions for the employment of women on maternity leave or senior citizens. Equally, we must look for ways to free many workers from the debt trap and bring them out of the grey zone and back into the labour market," he added.

The Home Office is also looking to speed up and simplify the residency procedure by digitizing the entire residency agenda. The upcoming law on the entry and residence of foreigners (Aliens Act) is to create the legal basis for a new information system (Integrated Foreigners' Agenda System - ICAS), which will allow for the electronic submission and processing of foreigners' applications for residence in the Czech Republic. The law is to newly introduce the role of the guarantor of foreigners' residence. The guarantors should be employers in case of employment or schools in case of studies. The draft legislative material should be submitted to the Government's Legislative Council by the end of 2023. It is expected to take effect on 1 January 2026.

The Czech Chamber of Commerce is the central point for collecting, checking and including employers' applications to the government's Skilled Worker Program. It handles over 80% of all applications from companies in the country. The shortage of employees in the labour market is a long-term structural problem of the Czech economy, caused mainly by demographic development. According to data from the Labor Office of the Czech Republic, employers currently lack 300,000 workers. However, over three-fifths of employers rely on other recruiting methods, so they do not even announce vacancies at Labor Office branches. The Chamber of Commerce has previously said that the state treasury lost at least CZK 84 billion in taxes and levies in 2018 alone due to the record number of unfilled jobs and that the losses will reach around CZK 110 billion in 2019. This year, the Chamber of Commerce estimates that the state's revenue losses will be around CZK 150 billion, which would solve a significant part of the public finance problem.

The most significant demand from employers is for technically oriented workers, such as metalworkers or machine workers. There is a shortage of craftsmen, but firms also lack bakers, pastry cooks, chefs, butchers, seamstresses, cattle handlers and health and social services workers. There is still a high demand for warehouse workers and drivers, e.g., forklift trucks or lorries. The quota for workers from the Philippines (3 000 per year) and Mongolia (2 000 per year) was due to increase from July this year. However, the Czech embassies are still not ready for this, so the program will not actually be extended until January 2024.

Prepared by foreign office CzechTrade Belgium

Source: Czech Chamber of Commerce, CEBRE