Foreigners on the jobs market in the Czech Republic
Foreigners in the labour market is a delicate topic, which is perhaps why many myths have grown up around it. For instance, we frequently hear it said (and not only in the Czech Republic) that “foreigners are taking our jobs.” Here, we aim to offer more accurate information on this topic. In the dialogue we can see that both foreigners and Czechs (Pavla’s mother) fear losing their jobs. However, for many foreigners the loss of a job can have much more serious life consequences – not only are they not entitled to unemployment benefits despite having paid taxes and social insurance, but also, if they are in the country for the purpose of working in a specific occupation, losing their job means losing entitlement to a residence permit: their reason for residence is no longer valid, and they must leave the country.
Employment: Work undertaken for an employer for remuneration, i.e. a wage, under the terms of a contract signed between the employer and employee. However, in the language of migrants who have come to the Czech Republic, “employment” may be understood as work performed for someone else regardless of whether it is performed on the basis of a signed contract, and regardless of whether it is officially authorised.
The economically active population: Employees and businesspeople, including persons with a link to these activities, even if they are not pursuing them at a given time (for reasons of sick leave, maternity leave, etc.), together with the unemployed. Economically inactive people refers to children aged up to 15 years old, people who cannot be employed for health reasons, and pensioners who are not employed or involved in business.
The unemployed: The share of non-working people within the entire economically active population of the society in question. A person is deemed to be unemployed who is of productive age, has no income from employment or business activities, is temporarily without work but is expecting to work again, is looking for active employment or wants to do business, and is willing to take up a job or start doing business. Every society contains a certain number of unemployed people.
The jobs market: A notional space where those offering work opportunities, i.e. employers, and those offering their labour for a certain wage, i.e. potential employees, meet. The social and economic situation, the personal attributes of individuals, and the business prospects of companies can either encourage or prevent employers’ or potential employees’ access to the jobs market.
Work alternatives to employment: All other work activities which a person does not perform for a wage from an employer. This includes, for instance, business activities, subsistence farming, work at home, hobbies, voluntary work, etc.
Foreigners initially enter the labour market with an idea of work which they bring from their own socio-economic background. The lifestyle, working hours, and organisational structures which they are accustomed to at home may often be quite different from those in the Czech Republic. If foreigners do not obtain information in their home country about how things work in the Czech Republic, they will arrive with the notion that work functions in the same way it does at home. Czech legislation allows agricultural workers, foreigner managers, the unemployed, trades people and students to enter the country for the purpose of work on the basis of employment agreements confirmed in writing, as employers or employees. Just as in the case of Czech citizens, their entry onto the jobs market is influenced by many social, economic and individual conditions.
Certain business advantages (e.g. tax relief) are frequently provided to foreign companies on condition that they create new jobs or infrastructure in the country. Foreigners enter the jobs market as employees either directly, i.e. as specialists on the basis of a special permit to undertake work in which there is interest in the country (e.g. the Green Card in the USA, or the active recruitment of qualified workers in the Czech Republic), or on the basis of a work permit which must be acquired upon arrival in the Czech Republic (hereafter “CR”). A person cannot be employed without this permit. However, many foreigners enter the CR for a purpose other than employment, such as starting a family, entering into business activities, studying or seeking asylum.
In contrast to Czech citizens, foreigners entering the jobs market must overcome legislative and administrative barriers, and also barriers of a socio-cultural nature. Upon their arrival, foreigners often do not know Czech, the educational qualifications they received in their country of origin may not be recognised in the CR, they may not know the specific conditions of employment in the CR, they may not know the local customs, etc. All these and many other associated barriers can lead to foreigners choosing a form of work other than employment: business activities, work at home, work under conditions other than those covered by Czech legislation. Foreign communities often replace the complex administrative and legislative system with their own organisation of work, thus creating a parallel labour market of their own. These work organisations are firmly anchored in the CR, and influence other factors such as the price of labour, services, etc. We call such organisations mediated work or entrepreneurial services. The organisations referred to are often the only helping hand which a foreigner with insufficient information can use to remain in the CR. However, sometimes, as in the case of the so-called “client system” (see below), they operate on the edge of the law. The influence of such organisations are often buttressed not so much by the will of foreigners as by the often non-transparent environment in which work and employment visas for citizens are awarded, and by the poor habits of Czech employers. Employers often use foreign workers as cheap labour, and do so in violation of various regulations stipulated in the Labour Code, the Employment Act, and rules relating to minimum wages, work safety, and so on. Not only does this system often turn work migrants into indentured dependents, but also obstructs their integration and denies them their individual rights and obligations.
The “client system” is a widespread system for employing Ukrainian and Russian-speaking workers in the Czech Republic. It involves the “protection” of a certain number of workers by one client who takes care of administrative requirements, and provides protection against for example the mafia. For such services, these workers pay a certain percentage of their wages. The originally informal client structure has gradually transformed into a network of mediating agencies, but the principle of how the system functions remains essentially the same.
Other structures have formed, for instance, among the Vietnamese population – the so-called “service”. This service provides foreigners with translations of their documents, takes care of securing documents from Czech authorities on behalf of the foreigners themselves, provides legal advice, and otherwise represents its customers with regard to Czech bureaucracy. This creates a space for bribes to change hands, for the rise of misunderstandings through the fault of the mediators, and also for the emergence of illegal activity. The existence of this service is primarily the result of the non-existence in Czech society of integration institutions for people arriving from a different country, the absence of concrete information at Embassies in the CR regarding what must be done or arranged by foreigners. Such people are thus left with nowhere to turn but to these services, as they are not themselves very capable of searching for the requisite information, primarily owing to a language handicap and their primary motivation to return to Vietnam.
Work permits issues relate to a specific employer rather than to the general performance of work or a concrete work activity. This fact poses a problem for foreigners, because if they change their employer, even if they are doing the same job, they must first apply for an entirely new work permit. The process requires the employer to first announce a job opening at the labour office, which has the task of examining whether the job in question could not be filled by a Czech citizen. Only then will the labour office issue a permit allowing the employer to hire a foreigner. Foreigners residing in the Czech Republic on the basis of a residence permit for the purpose of work must, on top of the residence permit, also have a work permit and a signed work contract.
Many foreigners who have come to the Czech Republic for work mediated by an agency arrive with mistaken ideas. If they hear that in the Czech Republic they can earn CZK 17,000 a month, they convert the sum into their own currency and it may seem like a fantastic amount. They forget, however, the while they have almost no housing expenses at home, in the Czech Republic they will have to pay high rent, insurance, and other costs. They will therefore have much less left over out of their monthly income. Another common mistake made by foreigners is to believe that, if they work in a factory, the factory is therefore their employer. In fact, if they work through an employment agency then the work contract is signed with the agency; if they are fired by the factory they are still an employee of the agency, and it is the agency which should find them further work.
In the past four years many foreigners have come to the Czech Republic for the purpose of work. Unfortunately, however, as a result of the economic crisis and as a result of the fact that many of the foreign workers came from poorer regions and were wholly unprepared for work in a factory, many were quickly fired by their firms. Many foreigners consequently found themselves in the Czech Republic with no agency interested in them, no housing, and no income or food. This situation is one which must be addressed by the architects of migration policies: migration should be managed with a view to the conditions which we create for the arrival of foreigners, so that the entire process is sustainable. If it is not done in this way, then the situation is negative both for the Czech Republic and for the migrants themselves. Financial earnings fall into the hands of mediators without any of the other parties in the process benefiting from it.
Foreigners still make up only a small part of the labour force in the Czech Republic. The role of labour offices means that foreigners usually are only employed in jobs that Czech citizens are not interested in performing (cheap construction labour, nursing etc.). There are studies showing that foreign workers and their impact on the labour markets, not just in the Czech Republic and Europe but also in North America, substantially contribute to economic growth in the country and often fill the gaps in the often not entirely functional or flexible labour market. There are many firms even in the Czech Republic which openly acknowledge that they could not function without foreign labour, and would consider moving their operations elsewhere in its absence. There is no need to describe what kind of effect this would have on the local and national economy, not to mention the tax and social security systems.
On 1st January 2011, the new Act on Foreigners came into effect. It did not significantly change the conditions for granting a work permit, nor the conditions for granting a residence permit for the purpose of work. Many foreigners who had established themselves in the Czech Republic are now employing a new generation of migrants, citizens of the Czech Republic, or other foreigners. However, newcomers interested in doing business must now show sufficient funds for investment in the country, not merely funds sufficient to support themselves here. Travelling to the Czech Republic for the purpose of doing business is thus no longer so easy.
A strong motivation to move to the Czech Republic therefore plays into the hands of mediators, who try to arrange residence permits for foreigners regardless of the purpose such permit is based on. As a result, people wishing to work in the Czech Republic may have a residence permit arranged for the purpose of participating in a legal entity (e.g. a cooperative) or even for a short-term stay (up to 3 months). Foreigners may then have no idea that they will end up in a situation where they are violating Czech legislation (and, indeed, several laws at once: particularly the Act on Foreigners Residing in the Czech Republic, and the Employment Act.); they may consequently be arrested, deported, and prevented for returning to the Czech Republic for some time.
In the past two years some firms have gradually begun to organise and support courses in the Czech language and basic information on the Czech legal and social environment. They themselves have begun to feel the need for so-called integration education to help newcomers to settle more permanently into the firm’s work processes. This represents a notable shift in comparison to times when firms employing foreigners often simply avoided this subject and their own responsibility in it.
Let us now take a look at the jobs market through the eyes of the families of our Czechkids. To sum things up, we could say that foreigners are perceived on the jobs market according to the type of residency they have: EU nationals, foreigners with permanent residence, and recognised refugees enjoy very similar conditions to citizens of the CR, but specific differences apply to certain groups.
The employment of foreigners: Olga’s mother is looking for a job without success. She has a long-term residence permit and a visa for the purpose of family reconciliation, but she must also have a work permit. She can only obtain such a permit in connection with a concrete job, and the Labour Office will check to ensure that it is not possible to hire a Czech citizen for the job first. Only if this condition is fulfilled can Olga’s mother then obtain a work permit. In addition, the employer must obtain a permit from the labour office to hire a foreigner, which further decreases Olga’s chances of getting the job. If Olga’s mother eventually finds such an employer and such a job the story doesn’t end there, because she must then change the purpose of her residence permit based on the work permit, and apply for a visa for the purpose of work. Luckily, today she should be able to obtain such a “requalification” of her residence permit without having to leave the country and apply for the visa again at the Czech embassy abroad.
Jami’s parents, who have applied for asylum, are in a different situation. In the first year of the asylum procedure they were not able to work at all, but thereafter were able to do so on the basis of a work permit. However, having received asylum, they are actually better off than Olga’s family, because the same rules apply to them as apply to all persons with permanent residence.
Business activities and foreigners: Let’s imagine that Olga has an uncle here who would like to do business. If the uncle has his permanent residence in the CR, he can do business as though he were a Czech citizen. If he has a trade licence, he can apply for a visa for the purpose of business, and thereafter do business like any Czech business person, with all the same rights and obligations attached to that undertaking. Suong’s father is also in the Czech Republic for the purpose of doing business. Because of the comparative ease of obtaining a visa for the purpose of doing business, foreigners use it even in cases where it is forbidden by law – in the case where the person is actually performing the work of an employee (the so-called “Schwartz system”). As a result, the rules and oversight of this area of activity have become much stricter in recent years.
Unemployment of foreigners: Olga’s mother cannot be listed as unemployed, i.e. documented at the labour office, as long as she only has long-term residence. This option is open only to foreigners with permanent residence or asylum status. Were she to obtain a job and lose it, the purpose of her residence for employment would also end. If in the meantime her visa for the purpose of family reconciliation also ended (among other things if it was terminated by the Foreign Police) she would have to end her residence in the Czech Republic or apply for a new visa. However, Olga’s father has lived here for more than ten years and so he can apply for permanent residence. He could then be unemployed without any risk of having to leave the Czech Republic. Olga and her mother could moreover then apply for permanent residence just five years after being granted a visa for over 90 days, and residing continuously in the Czech Republic thereafter.
The families of our Czechkids encounter various problems when looking for work, not least the attitude taken by Czech civil servants. The employees of labour offices and foreigners very often do not speak a shared language. Moreover, all the relevant forms are in Czech language. Very often, even a foreigner who can communicate in Czech does not understand exactly what the terms on a form mean (just for a moment, imagine an English or German official form – even though we can make ourselves understood, the specific language on the form could prove a hard nut for us to crack). In several regions, especially those with a high rate of unemployment, there is not much motivation on the part of Czech authorities to employ foreigners when they cannot even offer work to Czech citizens. Some employers moreover prefer to hire (not only) foreigners “under the table”. In addition, although foreigners with long-term residence and asylum status have de jure the same rights and obligations, their employer has one addition obligation: the employer must inform the relevant labour office about their employees for the purpose of statistics. However, this aspect also represents an administrative burden, and may understandably play a role in deciding whether or not an employer will hire such people. Employers can hire foreigners who are citizens of non-EU countries without long-term residence or asylum status, but this involves a considerable administrative burden and financial expense. The employer must advertise a vacant job position at the labour office in advance, must apply for permission to hire an employee from abroad, and must then pay a fee of CZK 2,000. The labour office decides on the matter, which means that the employer has no security that he/she will receive such permission. The foreigner must also apply for a work permit, which will cost them CZK 500.
Mr. Vasyl came to the Czech Republic looking for work. It was clear to him that at home in Ukraine he would not be able to provide his children with a good education, since he was simply not getting paid. He had studied to play the saxophone, and taught music at a secondary school for several years. When he arrived in the Czech Republic he discovered that he could only just pay the rent from his wages as a teacher. He found new work, arranged the necessary work permit, and applied for a new visa. Until these administrative matters were arranged he was unable to leave his original job – otherwise, he would have had to leave the Czech Republic and wait in Kiev for several weeks for the Czech authorities to issue a decision. Once the new visa situation was resolved, he began to work as a labourer, and taught himself all the different jobs which might be needed on small construction sites (bricklaying, plastering, paving, etc.). However, he is certainly not complaining. He has now been here for several years, along with his wife and children. He has learned Czech, and pays for his children to attend a private school where in his opinion they learn more. However, he has no intention to go back to playing the saxophone – he couldn’t support himself doing this anyway.
Last updated 15.11.2011
Český statistický úřad (2005). Legislativní a praktické podmínky ekonomické aktivity cizinců na území ČR. [The legislative and practical conditions of the economic activity of foreigners in the Czech Republic] http://www.czso.cz/ciz/cizinci.nsf/i/ekonomicka_aktivita
Moree, D. (2005). ‘Work in Prague’ i pro cizince. Podnikatelské lobby [Work in Prague – even for foreigners. The business lobby], January 2006.