Structural and productivity shift of industries in Slovakia and Czech Republic: A comparative study

Abstract

The objective of this paper was to explore the labor productivity growth and employment changes, thereby describing structural changes in the economies of Slovakia and Czech Republic in the time span of 1996-2016. As the main research method we chose shift-share analysis. The decomposition of the method identified the factors behind structural changes. The results shown that during the study period, the main driver of labor productivity in both economies was the upgrade of productivity itself within the industries (the socalled "within effect"). Slovakia was able to outpace Czech Republic in case of industrial production, agriculture and professional services. Employment had been evolving in both economies differently, particularly, Slovakia recorded the drop in employment in the sector of industrial production, whereas Czech Republic did not. Both economies have recorded labor switch from the primary sector to the services sector or to manufacturing. Overall taken, despite of very similar natural and geographic conditions, same political integration trends, and also similar economic background, perhaps due to the influence of sovereign policies and institutions, these two economies have been evolving differently. 314This topic is particularly important for the EU member states due to the presence of the European single market which fosters competitiveness, however, it might contribute to rising regional gap between "more" and "less" productive member states. Moreover, if particular EU states are integrated into European Monetary Union, the macroeconomic imbalances might have more profound impact on the structural stability of the whole monetary block.Recent analysis has pointed on substantial productivity growth rates in the 1990s and 2000s for the new EU member countries, particularly in the case of Czech Republic and Hungary. For instance, in the case of Czech Republic the average annual labor productivity growth rate was observed through several consecutive time periods (: 3,03%). As we can see from these numbers, impressively strong pace of growth soon became rather moderate. The analysis also indicates that the contribution of sectoral employment shifts to productivity increase is rather limited. The results identified are a likely reason for productivity gains and the shift of workers to more productive sectors (Mitkova & Dawid, 2016).Economic developments in the new EU member states during the transition period were also characterized by large shifts in the sectoral composition of GDP and employment, indicating a clear tendency of adjustment towards the broad economic structures in the EU-15. These broad shifts may thus be summarized under the headings of de-agrarization, de-industrialization and tertiarization (Havlík, 2005).The objective of the paper is twofold. First, it is to evaluate and compare the magnitude of structural changes in labor productivity and employment rearrangement across the industries of the national economies of Slovakia and Czech Republic. The second one is to identify the main fa...

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