Foreigners in the Czech Republic
3. Economic activity of foreigners | Contents |
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 pieces of information on taking up of work by citizens of the EU/EEA and Switzerland, 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.
Employment of foreigners with status of employees
Foreigners, citizens of the Slovak Republic excepted, were allowed until 30 April 2004 to execute work on the territory of the Czech Republic provided that they received a work permit and residence permit
By the accession of the Czech Republic to the European Union on 1 May 2004, conditions for employment of foreign citizens on the territory of the CR distinctively changed. Since that date citizens of the EU/EEA and Switzerland and their dependants are no longer from the point of view of Act No. 435/2004 Coll., on Employment, considered foreigners and according to the Act enjoy the same legal status as Czech citizens do, which means that they have free access to the labour market in the Czech Republic. The following belong to the EU Member States: Belgium, Czech Republic, Denmark, Estonia, Finland, France, Ireland, Italy, Cyprus, Lithuania, Latvia, Luxembourg, Hungary, Malta, Germany, the Netherlands, Poland, Portugal, Austria, Greece, Slovenia, Slovakia, Spain, Sweden, Great Britain. Besides the EU, the following belong to the European Economic Area (EEA): Norway, Liechtenstein and Iceland.
Other foreigners, who are not citizens of the EU/EEA and Switzerland or their dependants, can execute work on the territory of the CR on condition that they received work permit and residence permit provided that Act on Employment does not stipulate otherwise.
Valid work permits of foreigners
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.
Work permit can be granted to a foreigner by an employment office for a job vacancy, which is reported by the employer to be vacant and which cannot be filled otherwise with regards to the required qualification or lack of free labour force and the employer obtained permission to attract employees from abroad.
Work permit with regards to the situation on the labour market (the employer must have permission from the employment office to attract an employee from abroad) is granted also to a foreigner who will be a seasonal employee for the period of six months in a calendar year provided that between individual employments a six-month period passes.
Work permit regardless the situation on the labour market is granted to a foreigner
- who performs in the Czech Republic systematic educational or scientific activity as a teacher, employee of university attending scientific events or a scientist, researcher or research worker in research institutes;
- who will be employed for a limited period for the purpose of improving his or her skills and qualification in the selected job (trainees), but only for a period of maximally one year. This period can be prolonged, but as a maximum only for the period necessary to obtain professional qualification in accordance with regulations valid in the Czech Republic;
- up to 26 years of age performing occasional and time-limited works within exchange between schools or youth programmes, in which the Czech Republic participates;
- who is a clergyman of a church registered in the Czech Republic or of a religious society;
- for whom it is stipulated in a published international agreement, the ratification of which was approved by the Parliament of the CR and which is binding for the Czech Republic;
- who was granted a stay sufferance visa in accordance with the Act on the Residence of Foreigners or was granted a longterm residence permit for the same purpose or
- who is an asylum seeker or who was granted a stay sufferance visa in accordance with the Act on Asylum, however, after 12 months pass since the application for asylum was submitted at the earliest;
- who will perform work on the territory of the Czech Republic based on their being elected or nominated to their office; in that case the employer shall substantiate in writing that it is a job position filled by an election or nomination (Sections 97, 147 of the Act on Employment).
In these cases it applies to vacancies for filling of which the employer does not need a permission to obtain employees from abroad.
Data on work permits granted come from the records of individual employment offices, which in accordance with Act No. 435/2004 Coll., on Employment, decide within administrative procedure on granting or revocation of work permit.
Work permit is not required from foreigners who:
a) were granted asylum on the territory of the Czech Republic;
b) are holding permanent residence permit for residence on the territory of the CR;
c) are 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;
d) are
performing artists,
teachers,
academics at universities,
employees of universities attending scientific events,
pupils or students up to 26 years of age,
athletes,
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,
persons whose residence in the CR is not in excess of 7 consecutive calendar days or a total of 30 days in a calendar year;
e) are employed on the territory of the CR in accordance with an international agreement, the ratification of which was approved by the Parliament of the CR and which is binding for the CR;
f) are 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;
g) are employed in international public transit, if they were sent by their foreign employer for performance of their work on the territory of the CR;
h) are persons accredited in the area of mass media;
i) are military or civilian staff of the armed forces of a country of origin (sending-out country) in accordance with a special act;
j) perform work within preparation for their future occupation at schools and school establishments included in the network of schools, pre-schooling and school establishments;
k) are sent to the territory of the Czech Republic within provided services by an employer seated in another EU Member State.
In the case of employment of a foreigner under the letters a) to e) and letters j) and k), however, the employer or legal or natural person, to whom a foreigner was sent by his or her employer on the basis of a contract for performance of work - is obliged to inform in writing on this fact the relevant employment office on the day when the foreigner starts to perform his work as the latest.
Work permit cannot be granted to a foreigner, who
- applied for asylum in the Czech Republic, namely for the period of 12 months from the day of submission of the application for asylum or
- does not meet some of the conditions set by the Act on Employment for granting of a work permit.
Types of work 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.
Employer's duty to inform
Citizens of the EU/EEA and Switzerland and their dependants do not need to have a work permit for the purposes of employment on the territory of the CR. Employers or legal or natural persons to which citizens of the EU/EEA and Switzerland and their dependants are sent, are obliged on the day of start of execution of work of these persons as the latest to inform in writing about this fact the employment office, which is relevant for that as for the place of execution of the work. This duty to inform applies also to foreign citizens having permanent residence on the territory of the CR and thus do not have to apply for work permit (e.g. citizens of the Ukraine - see table 3-9).
Records of foreign nationals
Employers are obliged to keep records of citizens of the EU/EEA and Switzerland and their dependants as well as all foreigners employed by them or send to them by foreign employers for execution of work.
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, Moldova, 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.).
Prevailing part of citizens of the EU Member States with status of the employed (72.8 thousand in total) are citizens of Slovakia (59.8 thousand in total in the end of 2004). Of other EU Member States, a high number of workers are from Poland (8.9 thousand) and more than 1 thousand of persons are from Germany. Generally, more of them are men (almost three quarters of all employees from the EU Member States).
As for citizens of other countries, who work in the CR as employees, dominating are nationals of the Ukraine (22.4 thousand persons). The number of citizens of each of the following five countries was higher than 1 thousand persons in the end of 2004: Bulgaria, Mongolia, Moldova, the United States and Russian Federation. In comparison with the group of the employed from the EU Member States, in the group of other countries what is prevailing is higher share of working women, which exceeded more than one third of all of those employees.
Foreigners holding trade licence
Under Trades Licensing Act No. 455/1991 Coll., as 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. This stipulation thus applies also to nationals of a country, which is bound by an international agreement concluded with the European Community as well as to nationals of a country, which is bound by the EEA contract.
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 and citizens of Switzerland, Norway, Iceland and Liechtenstein, who produced a document on permanent residence from their country 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, citizens of the European Economic Area, 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). The exception to the rule of obligatory entry in the Commercial Register does not apply to citizens of Switzerland, because Switzerland is neither a member of the EU nor a member of the EEA. It should be noted that entrepreneurs in business under the Trade Licensing Act can run more trades than one provided that they have trade licence for each of the trades 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 2001, again as a response to another amendment to the Trade Licensing Act, which was published in the Collections of Laws under No. 356 in 1999. 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 the EU 15 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, since 2003 a rather high increase of these persons showed already in practice.
On 1 May 2004, the so-called Euro-amendment to the Trade Licensing Act came into force; it was published in the Collection of Laws of the CR under No. 374 in 2004. This legal document liberalized the conditions for start of trading - e.g. status of the EU citizens and Czech citizens were made equal as for submitting of documents necessary for obtaining of the trade licence or for proving of professional skills; however, the number of entrepreneurs from the EU increased by about the same number as during the last two years.
The number of foreigners from the EU Member States with valid trade licence is continually increasing and in the end of 2004 it was over 13 thousand persons. Most of them are Slovak nationals (8.8 thousand); fewer of them are Polish and German citizens (over 1 thousand persons). Unlike working foreigners with status of the employed, however, their share is still only one fifth of all foreigners with status of an entrepreneur. The total number of entrepreneurs is influenced especially by citizens of Viet Nam (22.0 thousand) and citizens of the Ukraine (19.5 thousand). Of other countries, the number of entrepreneurs exceeding 1 thousand was recorded for citizens of Russian Federation, Serbia and Montenegro and Bulgaria.
Total employment of foreigners
Total employment of foreigners refers to the sum of valid work permits of foreigners, number of foreigners registered by public employment offices, and number of foreigners holding trade licence. The exceptions are Tables 3-14 to 3-16, 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.) The figures on the number of residing foreigners presented in this chapter are for guidance only, as they do not include, for example, persons with visa up to ninety days; however, working persons having the visa are included in the total number of working foreigners.
Workers in main employment
Workers in main employment in the civilian sector of the CR (Tables 3-14 to 3-16) 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, 31 December 2003 and 31 December 2004. 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 3-14 to 3-16 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. Included in the underestimated are also foreigners with prohibited residence. For the first time, as at the end of 2004, data on the number of the underestimated were divided between the employed and the self-employed with regards to the disproportions between the data on migration and employment by nationality.
- 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.
Professional status
Employees (Table 3-14) 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 3-15, 3-15.1)
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).
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The number of foreigners with status of the employed was falling in the second half of 1990´s down to 93.5 thousand in 1999. After a temporary increase in 2000-2001 their number decreased again to 101.2 thousand in 2002; this development was influenced exclusively by the drop in number of working Slovak citizens. Since 2003, however, a slight increase in number of working employees is obvious; it totalled 108.0 thousand as at 31 December 2004. The number of foreigners with status of the employed depends on the situation on the labour market. Areas with low percentage of unemployment usually report higher number of foreigners with work permit granted or registered with employment offices as employees (Prague and neighbouring districts of the Středočeský Region).
In the category of foreigners holding trade licence, there is a trend for the self-employed to grow in number in comparison with the group of the employed. 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. 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. During the last two years, however, the number of entrepreneurs was increasing and in the end of 2004 it reached its historically highest level (more than 65 thousand persons).
The internal structure of foreign workers changed in the long run. While in 1994 the foreigners with status of the employed made almost four fifths of all the registered working foreigners, their number decreased in the end of 2004 to about three fifths.
Many foreigners have been using the possibility to enter the labour market as members of cooperatives or partners in general commercial partnerships and they might not be registered in the records of the Ministry of Labour and Social Affairs of the CR and the Ministry of Industry and Trade of 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 (e.g. data on prohibition of residence). The number of these working foreigners who are not kept in records of both the mentioned ministries, reached according to an expert estimation of the CZSO 65.0 thousand in the end of 2004.