Academic journal article E+M Ekonomie a Management

Institutional Analysis of the Contemporary Regional Labour Market in the Czech Republic

Academic journal article E+M Ekonomie a Management

Institutional Analysis of the Contemporary Regional Labour Market in the Czech Republic

Article excerpt

JEL Classification: E2, J4, J6.


In this study we analyse labour economic policy instruments, which are present in current regional labour markets. The framework of our analysis is based on the perceptions of important institutional players who are in direct daily contact with both sides of the market. Both labour offices and private recruitment agencies are critical institutional players in the labour market. Their ability to assess economic policies and market outcomes (employment and unemployment) provides a unique basis for institutional analysis.

Our hypotheses deal with public institutions and their ability to provide good quality labour market economic policies. A questionnaire was used to collect data from selected institutions and then to test our hypotheses. The expectations are that there would be differences in the way public policy is perceived by the public and private sectors and in the perception of the labour market as an economic phenomenon in the selected regions.

This study starts by introducing the socioeconomic differences between the regions followed by an examination of the economic policies that are dominant in the regional markets. The economic theories and current empirical results dealing with public policy effectiveness in the area of employment policy are then subjected to a critical review. The institutional analysis is predominantly focused on empirical evidence and the hope is that it is possible to also deliver a public policy recommendation, which will make the employment policies and their instruments more effective given the current institutional infrastructure.

Economists traditionally view institutions and scarce resources as a framework for economic activity (Aoki, 2001). Institutions are usually perceived to be players in a game i.e. decision makers, entrepreneurs, and politicians who can substantively influence the whole economy. But in the game theoretic approach and in our analysis the institutions are the rules of the game which constrain and shape human interactions (North, 1991), not the players.

These formal and informal institutions in the labour market are the target of this research study. Formal institutions are for example the employment policies, the minimum wage, policies regarding secondary and tertiary education, EU labour market policies, etc. The informal institutions are usually not visible to an impartial spectator or an economic analyst. These informal institutions include social norms, traditions and customs, which can significantly change and influence labour market outcomes and the economic activity of labour market players (Ostrom, 1990). To shed some light on the efficiency of the formal and informal rules we carried out an analysis of the experience of major institutional players in the labour market.

1. Labour Market Players and Rules of the Game

The Czech labour market is influenced by many economic agents (players). There are private and public sector players, both on the demand and supply side. The main players are public administration officers (European, national, regional), employers, unions, educational institutions and non-governmental (not-for-profit) organisations. Those players shape the rules of the game; however it is the state economic policy, which defines the actual rules of the game in the labour market.

The individuals (supply side) are the targets of programmes and policies financed by public funds (national and European). These programmes are focused on preparation (education) and adaptability (requalification, mobility, and lifelong learning), and ensure socially acceptable conditions (benefits) for unemployed citizens who are in danger of being permanently excluded from the labour market.

There is also public support aimed at the demand side (employers). There are public employment agencies, which provide information about vacant jobs and programmes for employers. …

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