“Nejsou lidi! “ ; how to cope with the Czech labour shortage

Tuesday, November 14

“Nejsou lidi! “ ; how to cope with the Czech labour shortage

 

It is not a “crisis”. High unemployment creates a crisis, not just for a country but for all the individuals affected. Forced unemployment diminishes people, and can permanently damage them.

 Nevertheless we are living through a time, the likes of which I have never experienced. In Prague, every other shop window carries a sign announcing that some staff are being sought. Major retail chains are running advertising, not for their promotions, but to attract the staff they need. Amazon lead the way with very direct announcements of how much they will pay. Even Dopravni podnik are advertising for drivers.

 Here in our office we have more assignments than since before the crisis, yet we are not making money; too many candidates are able to choose between firm offers from our client and from another. One of the biggest Czech beer brands had no brand manager for about 9 months. We see no sign of the trend reversing. How should employers (of marketing professionals, our area of interest) respond?

 

What has created this phenomenon?

 The most recent national unemployment figure available, for July, is 2.9%.[1] It was the same in June, and was the first time the figure did not go down since the post crisis peak figure of 7.8% in March 2010. So has the situation stabilised? The problem is that most economists believe that a mature economy needs a 5% unemployment rate to ensure significant balance between job offers and job seekers. In April this year Eurostat found that Prague, at 2.2% had the second lowest unemployment rate of any EU region[2]. In Prague just about anyone who wishes to work can do, even if some suggest both Sparta and Slavia Prague’s football coaches may soon be looking for a new job.

 

Obviously this is a reflection of the current healthy GDP growth of the economy; in the 2nd quarter of 2017, this was 4.5%, much better than expected, and well above the EU average. Of course this growth is in turn reflected in much better economic performance across most of Europe (the UK being a notable exception!). But the modern CZ has seen growth rates of 7% in the past, and Prague has had an unemployment rate of around 3% for a very long time, yet we did not see these shortages then. What is different this time?

 

It is important to remember that since the global crisis in 2008, the Czech Republic has had two recessions. In 2009 all Europe was suffering. In 2013 the Czech Republic slipped back into recession, while neighbouring Slovakia and Poland fared much better.

 When modern economies are doing badly, everyone knows it. Even if their own jobs are secure, people become worried by the news and become more cautious in their spending habits. This in turn affects what is called business confidence. Businesses do not invest (which further depresses GDP), and in order to protect their profit margins, they look for savings. The marketing budget is one of the first victims of this search. After the budgets are cut, eventually the people are cut too.

 Since 2009, we have witnessed the year on year downsizing of marketing departments and of the marcomms agencies which work with them. Virtually none of these employers was willing to train and develop fresh graduates. Remember that date…2009…8 years ago…

 The return to growth, when it finally came, was quite sudden. The GDP figures in late 2013 started to improve, but by that time most companies had already made their budgets for 2014, and had done so in the mood of caution that had become normal since 2009. During 2014, a lot of the marketing teams were caught out. Consumers started buying again, and many companies did not have the marketing budgets to help them compete for this new demand. By 2015, everybody was hiring again. Or at least, they were trying to hire…

 The problem was that they all wanted to hire junior to middle level management. People with 3-7 years’ experience. But as I wrote above, 8 years ago, in 2009, they had started cutting back, and had stopped trying to hire and train young graduates. Good people with 3-7 years experience simply were not easily available. Those who were doing well in their existing positions were unwilling to consider a move because they had seen what had happened in earlier years, and were unsure that the market had really permanently improved.

 There is another aspect to this which I, as a Brit, can perhaps see more clearly than my Czech colleagues and clients. When an economy such as the UK or Germany starts to do well and reaches “full employment “ (5% or less) it fills the vacancies with…immigrants. Fortunately for the UK, its language is spoken by very many educated immigrants, and to some extent this is true for Germany too. These countries are of course attractive for Czechs and others from the CEE countries because the rewards on offer are also much higher than at home. The Czech Republic cannot turn to immigrants in this way. Yes, as an EU country there is free movement of labour, so people can come here. But who will feel able to quickly learn the Czech language? Maybe Bulgarians. But educated Bulgarians already speak English, and in London they can earn 2/3 times as much as in Prague.

 So, in nearly all cases, we, and our clients are competing for a small pool of talent which, with few exceptions, comprises only Czech or Slovak nationals. What can we recommend as techniques and tactics for success?

 

The 90’s provides some inspiration.

 I wrote that I have never experienced a labour shortage like this. However when I started this business 23 years ago there were some similarities. There were vacancies everywhere. I opened this business with a queue of clients waiting for me to start, and deliver results. There was at least one occasion when I interviewed a candidate and was able to send the invoice for her successful placement the very next day. The difference was that people were looking around more for new careers; everyone was finding his/her way in a brave new world. Clients were willing to hire if they saw the right personality and attitude. You could not find a marketing manager with 8 years experience in 1996. They did not exist. In those days those who hired successfully were flexible; they were quick to interview; they showed the candidate a vision of an exciting place to work in; and they were decisive when they saw a good candidate, because they knew that later that day, another employer might also be meeting the candidate.

 I think all of those lessons are relevant today. That said, there are some differences; and I am also conscious that it is very easy for me to make these recommendations when I don’t have to live with the consequences of “bad hires”. On the other hand, they are recommendations based on what we see happening every day; with due humility I suggest that we see trends which the typical hiring manager is not aware of. Please take these recommendations in that spirit.

 Flexibilty.

 This relates to two factors: how closely a candidate must fulfil the requested criteria in respect of experience; and whether a gap can be filled by someone who may not be seeking full time employment.

 Compared to 20 years ago businesses are more mature; it is not possible for people with no direct experience to be put into a brand manager or account director role. But to some extent we think there can be more flexibility in terms of , for example, market sector experience.

 There is one source of talent with a lot of experience, which often cannot find employment: “returning mothers”. They may not be able to be in the office for more than 5-6 hours each day, but maybe they can work effectively at home. They might also be happy to return to a role slightly less senior than their previous one, in which case the employer gets a lot of experience for the salary paid.

 

The employer has to answer one question. What is the risk of hiring somebody who does not meet all the criteria (but seems talented and with the right attitude) compared with the risk of having an empty chair for several more months?

 

 

 Speed

 This is brutally simple. In the current market, good people have more than one employer interested in their services. On top of that, there is a particular Czech phenomenon, whereby if a candidate has no news, no indication that the employer is interested, they will assume no interest. Long, protracted processes which are all “interrogative” may also be disadvantageous. It may be your “normal” process, but the candidate may be meeting another employer with a simpler approach.

 

It’s a market; both sides have choices

 There is a delicate balance in the interview process; you need to find out if the candidate is good enough; but as soon as you see signs that you have someone good in front of you, you also need to start persuading that person that yours is the best place to work. It really is true that talented people choose their employer as much as the employer chooses them. Some of the advertising on LinkedIn is starting to demonstrate an understanding of this dynamic. No longer do they just say “we are seeking a brand manager”. They will describe why being a brand manager in their company is a great career choice; and they do this because they know five more similar companies are posting that they too are looking for a brand manager.

 Are these suggestions reasonable? What are the barriers to implementing them? We would love to get your feedback.

 

[1] Source : Eurostat, seasonaly adjusted. Czech Labour Ministry figures show a somewhat higher figure (3.6% in October)

[2] the lowest was NiederBayern in Germany, with 2.1%

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