Foreigners in the Czech Republic

Data concerning the employment of foreigners within the Czech Republic are derived from the Czech Ministry of Labour and Social Affairs’ records on valid work permits granted to foreigners and on Slovak citizens on books of employment offices, as well as from records on foreigners holding trade licences granted by the Ministry of Trade and Industry of the CR.

The records on valid work permits and employed SR citizens do not cover foreigners permanently residing in the CR. This is also why the number of employed foreigners is higher than a simple sum of the listed foreigner groups.

Valid work permits of foreigners

Foreigners and stateless persons employed in the CR enjoy the same legal status as Czech citizens do. However, they can only perform their jobs if they were granted a work permit, and a temporary residence visa for the purpose of employment.

The information on valid work permits granted to foreigners provided in this chapter pertains exclusively to persons holding visas for a temporary short-term stay up to 90 days and long-term visas over 90 days. It does not include Slovak citizens.

Foreigners, who acquired the right to permanent residence or asylum in the CR, have the same rights and duties as Czech citizens do, and no particular efforts are exerted to monitor their economic activities. Foreigners, who under Act No. 1/1991 Coll., on Employment, as last amended, do not need work permits and therefore are not included in statistical reviews, are:

a) dependants of members of diplomatic missions and consular authorities or of employees of international governmental organizations residing in the CR, provided that reciprocity is provided by an international agreement; in this case the employer shall notify of this fact the employment office pertinent to the place of where the job is done,

b) persons whose performance of work in the CR is not in excess of 7 consecutive calendar days or a total of 30 days in a calendar year and who are performing artists, teachers, employees of universities attending scientific events, pupils or students up to 26 years of age, athletes, and individuals that ensure in the CR deliveries of merchandise or services, or deliver and/or assemble this merchandise themselves on grounds of a trade contract, or perform guarantee and repair work; in this case the employer shall notify of this fact the employment office pertinent to the place of where the job is done,

c) persons about whom it is stipulated so in an international agreement binding for the CR and published in the Collection of Laws,

d) members of rescue units providing aid in compliance with international agreements on mutual aid in removing aftermaths of accidents and natural disasters and in events of humanitarian aid,

e) persons employed in international public transit,

f) persons accredited in the area of mass media,

g) members of the armed forces or civilian units of a party to the North Atlantic Treaty.

Data on issued work permits are derived from books of individual employment offices, which decide on the issuance or withdrawal of work permits in the framework of administrative proceedings carried out in accordance with Act No. 1/1991 Coll., on Employment, as last amended, and Act No. 9/1991 Coll., on Employment and Powers of Authorities of the Czech Republic in the Area of Employment, as last amended.

Types of permits

Individual permit - a permit to employ a foreigner under a contract of employment by a domestic employer. The domestic employer is a legal or natural person authorized to carry out economic activities in the CR on the grounds of (i) a record in the Commercial Register or another register stipulated by the law (e.g. the Trade Licences Register or the Patent Agents Register), (ii) a record in other relevant registers (e.g. the Auditors Register or the Tax Consultants Register or (iii) an entry in specified records kept by an competent authority of the CR (such as records of self-employed farmers). The domestic employer is also a natural person, which does not run a business and employs another natural person for its own needs.

Contract - regards employment of a foreigner by a legal or natural person residing outside the CR, which is not engaged permanently in business in the CR and dispatches its employees to the CR to execute business or other contracts concluded with a domestic legal or natural person.

The tabular summaries by countries point to certain traditions, but also to possible free movements (Slovakia), cooperation persisting from the past (Poland, Bulgaria), offers of less skilled jobs (Ukraine, Romania, Moldavia, Belarus), and last but not least the opening of labour market to other countries, when the inflow of capital to the CR is accompanied by the inflow of labour force, too (Germany, USA, United Kingdom, France, etc.). Work permits for jobs calling for basic or lower secondary education (secondary without GCSE or secondary vocational) are primarily granted to citizens of the former CMEA countries (Poland, Ukraine, Bulgaria, Moldova, Belarus, Romania, and Mongolia), while those requiring secondary and university education for the job are mostly received by citizens of western countries (Germany, USA, United Kingdom, France, and Austria).

There are 17.91% of females among the total (4 678) of the EU citizens employed in the CR as 31 December 2003. More than a half of the EU citizens (61.7%) fill up jobs conditional on university education. 29.6% of the EU citizens do jobs calling for secondary education and 8.7% of the EU citizens are engaged in jobs requiring basic and lower secondary education. In the Czech Republic, 69.6% of the EU citizens have individual contracts of employment with a legal or natural person. Employment based on business or other contracts concluded between Czech and foreign legal or natural persons is most frequent with Germany (474 persons), United Kingdom (315 persons), Austria (219 persons), and France (157 persons).

Slovak citizens registered by employment offices

Under Agreement No. 227/1993 Coll., on Reciprocal Employment of Citizens, concluded between the governments of the Czech and Slovak Republics, citizens of the SR are allowed to work on in the CR disregarding the situation in the labour market. Employment offices register their work activities only - the number of Slovak citizens in individual administrative districts of the CR is indicative of interests employers take in this labour force.

No permit is requested by authorities from Slovak citizen who work or wish to work in the CR. Pursuant to the above-mentioned Agreement, the employer is obliged to have the Slovak citizens it employs registered. Employers with their head offices in the CR do so with the employment office pertinent to the employer’s head office. Employers having their head offices in the Slovak Republic and dispatching their employees to work in the CR have their employees registered with the employment office the workplace come under. The duty to register Slovak citizens in the CR does not apply to:

a) citizens, whose employment or execution of the job in the CR does not exceed 7 consecutive calendar days, or a total of 30 days of a calendar year; in such a case the employer shall inform the relevant employment office about this fact,

b) operators engaged in personal and goods transport, dispatched to the CR,

c) accredited personnel of mass media dispatched to the CR by their employers.

The Agreement permits Slovak citizens - job applicants - to be provided with material security. The conditions, under which the material security is given, including amount and payment, are governed by legislation of the CR on condition that the last employer’s head office before the application was filed was in the CR and that the employment within this country took at least 12 month and was not interrupted. The period of employment on the territory of the other party to the Agreement is counted in the period after the expiration of which unemployment benefit can be claimed. For calculation of the benefit, employment in the country of the other party to the Agreement is not considered to be employment abroad.

Foreigners holding trade licence

Under Trades Licensing Act No. 455/1991 Coll. as last amended, foreigners can do business in the CR like Czech citizens, if they fulfil certain conditions stipulated by this Act and associated regulations. They are allowed to do business in the framework of the Act above as foreign natural persons, but they can also set up in the CR legal persons or found organizational components of their enterprise abroad.

Foreign natural person is a natural person that has no permanent residence in the CR, but whose residence shall be permitted for the purpose of doing business (Act No. 326/1999 Coll.), unless such a natural person is a citizen of an EU member country the CR entered into an agreement free of this restriction with.

For the purpose of this publication, the concept of “foreigner holding trade licence” has been chosen, because the numbers of entrepreneurs include entrepreneurs-foreigners with transitional stay above 90 days, entrepreneurs-foreigners with permanent residence or refugees, and citizens of the EU member states who produced a document on permanent residence in the EU to get a trade licence.

The trade licence for foreign natural persons (i.e. entrepreneurs with stay above 90 days for the purpose to carry out business activities) comes into force on its entry in the Commercial Register in the scope written there. For other foreigners in business under the Trade Licensing Act (citizens of the EU member states, foreigners with permanent residence, and refugees), the trade licence comes into force on the day of notification (or in the case of permitted trade on the day the decision on awarding the trade permit came into force). It should be noted that entrepreneurs in business under the Trade Licensing Act can run more trades than one and this also applies to foreigners.

The number of entrepreneurs-foreigners holding trade licence was gradually increasing from one year to another. The number dropped in 1998 for the first time as a result of the amendment to the Trade Licensing Act, which was published in the Collections of Laws under No. 286 in 1995. The amendment imposed rather strict duties on entrepreneurs as to submitting law-specified documents. Another decrease occurred after 2002, again as a response to another amendment to the Trade Licensing Act (No. 356/1999 Coll.). This amendment and Act No. 326/1990 Coll., on the Residence of Foreigners in the Czech Republic made stricter the conditions for granting long-term visas for the purpose of carrying out business activities on the one hand, but allowed EU citizens to run business in the Czech Republic only on the basis of their being EU citizens on the other hand.

Given the facts above, the trade licensing offices started to gradually discard from records the entrepreneurs-foreigners who failed to submit required documents on residence and other documents. This made entrepreneurs-foreigners decrease in number in 1998 and 2002. However, in 2003 an already rather high increase of these persons showed, mostly citizens of Slovakia and Viet Nam.

Total employment of foreigners

Total employment of foreigners refers to the sum of valid work permits of foreigners, number of Slovak citizens registered by employment offices, and number of foreigners holding trade licence. The exception is Tables 3-16 to 3-18, which present a wider estimate of the number of foreigners working in the CR (see the notes on methodology below).

Foreigners holding residence permits

The total number of foreigners holding residence permit is derived in the introductory Tables 3-1 and 3-2 as the sum of the number of foreigners with permanent residence and the number of foreigners with 90+days visas. (See Chapter 1. ‘Demographic Aspects of the Foreigner’s Life in the Czech Republic’ for definitions of these categories.) Attention should be drawn to the fact that each foreigner is entitled to apply for permanent residence after his/her 10-year continuous stay in the CR on the basis of a long-term visa. The figures on the total number of foreigners with permanent residence presented in this Chapter are for guidance only, as they only include foreign nationals with permanent residence in the CR who got a trade licence.

Workers in main employment

Workers in main employment in the civilian sector of the CR (Tables 3-16 to 3-18) were quantified on the basis of results provided by the Labour Force Sample Survey (LFSS). Classified to this category are persons belonging to one of the following groups:

a) single job holders - i.e. respondents with formal job attachment to one employer only or whose business activity is the only source of their incomes,

b) multiple job holders (main, secondary) - persons with more work activities performed for wage, salary, or another type of compensation for the work done; the job in which the holder works full time or more hours than in the other job is taken for the main one.

All the data measured by the LFSS are weighted by the frequency of age groups of males and females, which was projected into the individual mid-quarters based on definitive demographic data referring to 31 December 2001, 31 December 2002 and 31 December 2003. This method of calculation corresponds best to the circle of persons included in the survey. The LFSS is a continuous all-year-round survey. For this reason Tables 3-16 to 3-18 show annual averages (unlike the other tables). The data do not include members of the armed forces.

These tables also encompass other categories of foreign citizens, which are included in the total number of foreigners - main jobholders - in the CR:

– underestimation: the category of these employed foreigners is based on the difference between development of the number of persons with permanent or long-term residence (since 2000: on the number of foreigners with 90+days visas), and the total of persons with trade licence and work permits. The quantification took account of the proportions of the given characteristics in the second half of the 1990s in particular;

– prohibition of residence: data on prevailing part of foreigners, which refer to persons legally staying in the CR. Data on the employment of foreign nationals staying in the CR illegally are not available and cannot be objectively established by any statistical survey; figures on the prohibition of residence imposed on foreigners seem to be the only source of information available for the time being. The figures were used to roughly estimate a certain portion of foreigners working illegally in the CR. Getting better estimates of the total unemployment of foreigners in the CR should be dealt with in the framework of estimating employment in the so-called grey economy.

Compared to the publication issued in 2003, data for 2002 are better specified herein. Especially, data from administrative sources of individual ministries on pertaining of working foreigners to industries were used and a correction of the number of working foreigners by the results of a sample survey was made.

Professional status

Employees (Table 3-16) are individuals with a formal job attachment, disregarding whether they really worked in the reference week or not. For the needs of international comparison, the group of employees also includes members of production cooperatives, as recommended by ILO.

The self-employed include employers (entrepreneurs with employees) and own account workers (entrepreneurs without employees). Family workers are also classified to the self-employed, disregarding the number of hours they worked in reference week.

CZ-NACE activities (Table 3-17)

The national Industrial Classification of Economic Activities (“OKEČ”, also referred to as the CZ-NACE) is fully based on the international standard Nomenclatures des Activités Éconimiques des Communautés (NACE) compatible with the International Standard Industrial Classification of all Economic Activities (ISIC, Rev. 3 ).

The Chapter also includes a list of on bilateral agreements concerning reciprocal employment of citizens (Table 3-19), which relate to work permits granted to foreigners. The socio-economic changes and constitutional developments in the CR and eastern and central European countries brought about changes in migration flows, too.

In the interest of economic cooperation development and with regards to the needs of labour force market, the CR concludes bilateral agreements on reciprocal employment of citizens and reception or exchange of trainees. The agreements are always reciprocal. They are concluded in accordance with legal regulations of the other parties as well as generally acknowledged principles of the international law and obligations that arise for the contracting parties from bilateral and multilateral international agreements. They are negotiated at government level, since they lay down measures, the implementation of which falls under the competency of several departments. The Ministry of Labour and Social Affairs is the coordinator for the Czech Republic.

Intergovernmental agreements are general contractual documents for the implementation of which the contracting parties negotiate in some cases annual reports to specify upper limits of the number of citizens to be employed in a calendar year. Authorities of the contracting parties issue methodological and/or administrative procedures for the implementation of the agreements.

Characteristic of the Slovak citizens on books of employment offices was development almost identical to that of foreigners - work permit holders by the end of 1996. At the end of the year the number of registered Slovak citizens stood at 72 thousand, increasing three times (by 49 thousand) on the year 1993. In contrast to the previous group of workers, however, a considerable rise in the number of registered Slovak citizens working in the CR occurred in 2002 and 2001 (63 thousand persons), after a three-year decrease (53 thousand in 1999). However, their number dropped again in 2002 (56 thousand persons). After the deviation in 2002, the year 2003 saw again an increase to 58 thousand persons.

The number of foreigners holding trade licence culminated in the late 1997 (next to 64 thousand persons) for the first time, rising almost 3.5 times compared to the end of 1994. The year 1998 saw a drop of almost one third on the previous year. Despite this, the number markedly rose the following year. Since the year 2000, this trend of the number of these working foreigners has been affected by the amendment to the Trade Licensing Act. And making stricter the condition for obtaining long-term visa for the purpose of business, associated with the amendment, led to a relatively high drop in the number of these persons in 2002. However, in 2003 their number increased to more than 62 thousand, similarly as in the above-mentioned categories.

The internal structure of foreign workers changed in the long run. While in 1994 the foreigners holding work permit accounted for a more than one third of the total employment of foreigners, the end of 2003 saw only a bit more than a quarter of them (27.6%). The proportion of Slovaks registered by the employment offices dropped from 43% in 1994 to 35% in 2003. On the other hand, trade-licence-holding foreigners, who made up a fifth of the total employment of foreigners at the close of 1994, accounted for 37% of this total employment at the end of 2003.

For 2003, a growth of all categories of working foreign nationals was characteristic; the proportion among them, however, remained almost unchanged in comparison to 2002.

Many foreigners have been using the possibility to enter the labour market as members of cooperatives or partners in general commercial partnerships. The Czech legislation in force allows foreigners to have neither work permit nor trade licence to implement this activity in the CR. This fact was taken account of in quantifying the underestimation of the number of working foreign nationals, which stems from different trends in the number of different nationals living in the CR and the number of foreigners recorded by employment and trade licensing offices. Besides, the quantification of supplementary data on the number of foreigners used other administrative data, too.