Pace of Czech Republic's employment growth likely to decelerate

In the Czech Republic, employment reached an all-time high in Q1 15. However, solid employment growth is visible in all CEE countries. The rise in employment is attributable mostly to increasing labour demand in the private sector. The growth in the number of working persons in the private sector is primarily driven by the recovery in the service sector, which led to the substantial rise in the numbers working in this area. 

In Q1 15, employment in the manufacturing sector in the Czech Republic was even the dominant source of employment growth. Due to the economic revival, employment in the CEE region is likely to rise further in the near future. In Poland in 2014, the rise in the number of working persons was affected by the extension of maternity leave from 6 to 12 months for parents with children born after 1 January 2013 (persons on maternity leave are considered occupationally active and in employment). 

This statistical effect should however gradually diminish, so the pace of employment growth is likely to decelerate in 2015 and 2016, says Societe Generale. On the other hand, according to the National Bank of Poland's business climate survey, the predominance of enterprises planning to increase employment over those planning to cut is widening, which suggests that the situation on the labour market should improve further. Although the current economic recovery in the CEE region seems to be strong enough to generate new vacancies and reduce unemployment growth (in Q1 15, GDP grew by 3.6% yoy in Poland, by 4.0% in the Czech Republic and by 3.5% yoy in Hungary), while wage growth remained muted, added Societe Generale.