Three quarters of companies plan to invest, most often in digitalization and robotization. Yet over 40 percent of managers expect these changes to save them only a small percentage of their workforce. More than half of companies want to hire new employees. This is according to the current AFI Business Environment Survey conducted among Czech companies by the Association for Foreign Investment - AFI.
More than half of the respondents (53 per cent) expect their company to evolve towards digitalization and robotization. 44 per cent of companies plan to shift through the development of new products and processes, and 36 per cent plan to invest in building modifications to reduce the energy intensity of operations.
"We see a great appetite among companies to invest and continue to grow. Almost a quarter of companies also declared their intention to implement artificial intelligence tools. We are talking about investments to be directed to operations in the Czech Republic. Companies are interested in keeping development in our country, which is definitely good news for the Czech economy," says Kamil Blažek, Chairman of AFI.
About a third of the companies surveyed also confirmed their interest in participating in the post-war reconstruction of Ukraine.
Demand for people remains strong despite automation
Although companies are going to invest heavily in digitization and automation of processes and production, their appetite for human labor remains strong. Half of the companies are planning to recruit (51%) and another 41% want to maintain their current workforce. Only 8% of the companies surveyed report an intention to lay off.
Expectations for reduced labor needs related to advanced technologies vary considerably across the sample of firms surveyed. The largest share of managers (42%) estimates that the deployment of robotics and digitalization will lead to a reduction in the number of employees by lower units of percent. Almost a quarter (23%) estimate that technology will save around 10-15 per cent of the workforce. Only 7 percent of respondents expect to save more than 30 percent of their workforce.
"Labor shortages are leading companies to think more and more about automating and robotizing their processes, which will help streamline. However, it is increasingly becoming clear that we are short of labor in the Czech labor market and even technology will not completely solve this problem. This applies to both skilled and unskilled positions," says Gabriela Hrbáčková, Vice President of AFI.
"Without investment in education and an immediate radical change in the state's smart migration policy, we will find ourselves in a complicated situation in the coming years and we will hinder the development of our economy," Hrbáčková adds.
ESG is rocketing in importance
The survey also asked businesses about the activities they use to meet the requirements of non-financial reporting. Here, companies most frequently mentioned the development of an ESG strategy including specific objectives, sourcing renewable energy, and investing in cyber security. Implementing circular economy principles and investing in green building technologies are also common. In the social area, these are work-life balance benefits.
"Despite the growing importance of adherence to Environmental, Social and Governance (ESG) principles, the survey again confirmed that a large number of companies are not yet aware of the impacts and opportunities arising from ESG. A large part of the blame also lies with the government and public administration, which needs to help companies start in the right direction - to use ESG to gain competitive advantages in the European market," says Kamil Blažek.
A message to politicians
According to the companies surveyed, the best way to simplify the business environment would be to speed up permitting processes, digitalize the public administration, reform the education system and build infrastructure faster.
AFI conducts an annual survey of the business environment among companies across the Czech Republic. This year's survey involved 222 companies with an even distribution of size from small to large enterprises.
Chambers of commerce, economic associations and other sectoral organizations have also been involved:
Association of Defence and Security Industry of the Czech Republic
Association of Manufacturers and Suppliers of Medical Devices
British Chamber of Commerce
Camera di Commercio e dell' Industria Italo-Ceca
Czech Insurance Association
Czech Space Alliance
Chamber of Commerce of the Czech Republic
Indian Chamber of Commerce in the Czech Republic
Italian-Czech Chamber of Commerce and Industry
JETRO-Japan External Trade Organization
Canadian Chamber of Commerce in the Czech Republic
Karlovy Vary Business Development Agency
Chamber for Economic Relations with the CIS
Nordic Chamber of Commerce
Regional Chamber of Commerce Brno
Automotive Industry Association
Association of Industry and Transport of the Czech Republic