The Czech economy is booming – and so is the informal, grey economy, with an estimated quarter of a million people working illegally, as employers turn to so-called “underground agencies” to procure employees.
Average monthly salaries have been on an uninterrupted upswing in the Czech Republic since the start of 2014. This stems both from the healthy development of the economy and wage growth pressure due to a chronic labour shortage.
But beneath the surface, there has also been an unhealthy development – the increasing use of “underground employment agencies”, which can offer temporary workers to employers at about two-thirds the cost legal agencies do.
Radovan Burkovič, head of the Association of Labour Agencies, said in a recent interview with public television that while there have always been shady middlemen ready to supply illegal workers, their numbers have grown along with the long-running wage growth pressure.
“There are a variety of ways the law is being circumvented. There are also many direct violations, but often it is done on the border of legality.”
“As for illegal workers, those from outside the EU cannot be hired through an agency. Since 2012, it is illegal to hire temporary workers from non-EU countries who otherwise require a work permit. But this is exactly often the case with businesses acting like agencies operating on the Czech market.”
Under Czech law, an employment agency temporarily assigns its own employee to perform work for a client on the basis of an agreement between the agency and the client. A legitimate agency cannot temporarily assign an employee who is a holder of an employment card, a blue card or an employment permit (foreigners outside the EU).
The overwhelming majority of the estimated 250,000 people working illegally in the Czech Republic are hired through middlemen – the so-called underground agencies. But according to the Ministry of Labour and Social Affairs, illegal employment has been on the increase since 2016. It was that year, when, for the first time ever, local authorities caught more foreigners than Czechs working illegally.
Of the 3,000 people identified in 2017 through spot inspections as having been illegally employed, more than 70 percent were from non-EU countries, in particular from Ukraine, Moldova and Vietnam, the daily Mladá fronta Dnes reported.
The State Labour Inspection Office last year imposed 440 fines over illegal employment totalling about 85.7 million crowns. This year, those figures are on track to rise about 10 percent.
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