Entrepreneurs, self-employed and manual professions most economically at risk
Professions most economically at risk
The financial resources of Czech households are being confronted with the beginning of an economic downturn, although the overall mood remains relatively positive in spite of growing uncertainty.
More than 500,000 Czechs are faced with existential problems. The financial situation index of households monitored by the STEM agency in cooperation with KPMG has shown a slight decrease since May 2020 and is currently at 2016 levels.
People working in hard-hit sectors such as tourism and hospitality and people who were facing problems already before the pandemic are the two groups most seriously impacted by the COVID-19 crisis and related measures, as they have affected mostly entrepreneurs, self-employed persons and blue-collar workers.
“COVID-19’s novelty is that at once two divergent social groups are confronting increasing economic troubles – on one side are the people who have always been economically weaker, less active and more dependent and thus endangered by every economic downturn, and on the other are members of the active and independent population, i.e. small entrepreneurs, self-employed persons, and some of the liberal professions. This dichotomy probably results from the spring lockdown hitting both the demand side of the economy (lower sales) as well as the supply side (lower production), in contrast to the economic crisis of 2008,” comments KPMG’s Director of Financial Sector Services Mojmír Hampl.
The ability to get by with one’s income has been slightly worsening
Although people have had the possibility to accumulate savings in the past months and were not obliged to repay deferred liabilities, some households are close to running out or have already run out of their savings. The overall ability to get by with one’s income has slowly become worse and is most probably about to further deteriorate after the end of the moratorium on loans on 31 October. The unemployment rate has not yet grown significantly as a result of the crisis (3.1% in January; 3.8% in August), but this may change with the end of the Antivirus programme or once the economic impact of the pandemic’s second wave hits.
“So far, the sceptical scenarios of some analysts from the spring have not come true, and Czech households are still doing relatively well. Problems have been deepening for those already not well off before the pandemic. Of course, we will have to see what effects the autumn restrictions will have on the economy,” says sociologist and Director of STEM Martin Buchtík.
Czechs’ general mood did not deteriorate significantly over the summer
The financial situation index of Czech households decreased by four more points compared with May 2020. However, long-term developments are still relatively good. While the current decline is the largest annual decline in the post-1989 history of our country, a large number of households has nonetheless been able to accumulate significant financial resources or to invest. This should help them get through the crisis without any major problems if they are tackling only minor decreases in income.
The continuous Trends survey has been carried out by analytical agency STEM (www.stem.cz) since the beginning of the 1990s, using a face-to-face method on a representative sample of adult Czechs. Respondents are selected via a quota method. The survey is always carried out on a sample of at least 1,000 respondents and was last undertaken between 31 August and 13 September 2020.
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