Page 18 - IDEA Study 10 2015 Skills Mismatches

4. Overall efficiency of the labor market This section studies the efficiency of the matching process between vacancies and unemployed individuals in the Czech Republic and its evolution over time. For this purpose, I use the Beveridge curve, a commonly used graphical representation between the number of unemployed and the number of vacancies. Figure 6 illustrates how the relationship between unemployed and vacancies evolved over time from January 2005 to August 2015. In the first part of the observed period, the labor market moved in the upper left direction towards decreasing number of unemployed and increasing number of vacancies. In 2008, the situation quickly changed and as the economic crisis hit, the number of vacancies decreased, and the number of unemployed rose. Between 2010 and 2013, the labor market remained in the lower right part of the graph, where the number of unemployed is high and number of vacancies is low. In 2014, however, the labor market started to improve substantially and in October 2015, the labor market returned to practically the same position it was in January 2007. This shows that the Beveridge curve returned to the pre-crisis situation (it did not move outwards as was the case for other European countries), which suggests that the economic crisis did not affect the efficiency of the matching process on the labor market. This provides some evidence that there are no substantial mismatches on the Czech labor market which would be revealed by the economic crisis. Figure 6. Beveridge curve (2005-2015) Source: Ministry of Labour and Social Affairs of the Czech Republic, Statistics: https://portal.mpsv.cz/sz/stat/nz, own calculation 14