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R 191005Z AUG 09
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UNCLAS SECTION 01 OF 02 PRAGUE 000484 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PINR ECON ELAB EUN PGOV PREL SMIG EZ
SUBJECT: CZECH REPUBLIC: REPLY TO REQUEST FOR INFORMATION 
ON MIGRATION IN EUROPE PROMPTED BY THE FINANCIAL CRISIS 
(C-RE9-00762) 
 
REF: STATE 43864 
 
PRAGUE 00000484  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY: The effects of the global financial crisis 
are evident in the migration patterns of both skilled and 
unskilled workers to the Czech Republic (CR).  In the two 
years prior to the economic slowdown, third-country workers 
poured into the CR to satisfy a growing labor shortage, 
especially in the manufacturing sector.  Anticipating that 
the economic slowdown in the CR would hit third-country 
workers the hardest, the Czech government (GOCR) developed 
programs for the internal transfer and voluntary return of 
foreign workers, ostensibly designed to assist the most 
vulnerable and to stave off economically-driven xenophobia. 
The inflow of foreign workers to the CR has dropped 
dramatically since the fourth quarter of 2008, when a severe 
external demand shock led to double digit drops in year on 
year Czech exports and manufacturing. 
 
-------------------- 
Welcome and Farewell 
-------------------- 
 
¶2. (SBU) Prior to the onset of the global financial crisis, 
the CR experienced a flood of third-country (non-EU) workers, 
primarily to satisfy the low-skilled labor needs of the 
growing domestic manufacturing sector.  According to the 
Czech Labor Ministry Statistics Department, 2007 saw the 
arrival of over 27,000-country workers, a forty percent 
increase from the 2006 level.  Third-country economic 
migration numbers increased another fifty percent in 2008. 
Among the largest non-European ethnic groups arriving were 
Vietnamese (from the arrival of nearly 700 new laborers in 
2006 to over 16,000 in 2008), as well as Mongolians and 
Uzbeks.  However, between January and May of 2009, the number 
of third-country, legal workers declined by over sixteen 
percent. 
 
¶3. (SBU) Interior Ministry Department for Asylum and 
Migration Policy Analysis Head Pavla Novotna and her section 
performed an internal analysis which estimated that 12,000 
foreign workers would lose their jobs in 2009, and an 
estimated 68,000 work permits would expire in early 2009. 
The Interior Ministry (MOI) recognized that this meant that 
workers, primarily from Mongolia and Vietnam, would become 
unemployed and be unable to afford return tickets to their 
home countries.  These individuals, Novotna explained, would 
not be eligible for social services under the Czech system, 
and could be forced into poverty, crime, or the gray market 
(unofficial or unauthorized distribution of otherwise legal 
goods and services).  MOI correctly predicted that EU 
citizens who lost jobs would return home without GOCR 
assistance. 
 
¶4. (SBU) In February 2009 the MOI launched a voluntary return 
pilot program, which provided 500 Euro and a return flight to 
2000 legal, third-country workers who lost their jobs due to 
the economic slowdown.  According to Novotna's colleague 
David Vondracek, the Department for Asylum and Migration 
Policy Unit for Policy and Analyses sold this program to 
pragmatic then-Deputy and now-current Finance Minister Pavel 
Janota with the promise that it would ultimately save money 
in legal and humanitarian costs.  As of mid-June, roughly 
1000 Mongolians, 300 Uzbeks, and 200 Vietnamese participated 
in this program.  Thanks to a targeted information campaign, 
the 2000-participant cap was reached in July 2009.  The MOI 
is now launching a second phase of voluntary return for 
2000-3000 more applicants with a  ticket and a 300 Euro 
payout.  In addition, the MOI will begin offering return 
transportation to illegal workers who will not be eligible 
for a payout.  Illegal workers who take advantage of this 
offer will be granted a shorter re-entry ban than deportees 
from the Schengen Zone and a "clean slate" with respect to 
undocumented work. 
 
---------------- 
Those Who Stayed 
---------------- 
 
¶5. (SBU) The MOI, in cooperation with the Czech Labor 
Ministry, also instituted an internal transfer program in 
early 2009.  Third country workers who lost their jobs are 
referred to employment offices, which places workers in other 
factories around the CR.  Labor Ministry Official Vera 
Kolmerova explained that the Foreign Ministry also suspended 
issuance of new work permits to Vietnamese citizens, which 
provides incentive for factories in need of foreign labor to 
seek internal tranferees. Czech visa issuance in Hanoi had 
also been suspended from November 2008 to March 2009. 
 
PRAGUE 00000484  002.2 OF 002 
 
 
(COMMENT: Although Foreign Ministry officials publically 
offer economic explanations for the suspension of consular 
activities at the Czech Embassy in Hanoi, it was likely 
connected to accusations of corruption (see paragraph 6). In 
fact, a Foreign Ministry Official told us that the full 
overhaul of Czech consular operations around the world was 
attributable to incidents in Hanoi. END COMMENT) 
 
¶6. (SBU) The estimated 60,000-strong Vietnamese community 
constitutes the Czech Republic's second largest minority 
ethnic group (after Roma).  Of these 60,000, roughly one 
third arrived in the last two years with the goal of finding 
work and sending remittances home.  Many Vietnamese workers 
obtained their jobs and legal status in the CR through "job 
agencies."  These agencies are largely unregulated and, for 
the going rate of USD 10,000, promise a job paying USD 1000 
per month.  According to Thu Hien, a member of the local 
Vietnames advocacy group Klub Hanoi, in reality, however, 
most Vietnames workers receive on average only USD 500 a 
month (roughly 30 percent below the national average income). 
 Furthermoe, job agencies often garnish a significant portion 
of workers' wages for "other expenses," such as housing or 
food.  According Irena Konecna, Director of La Strada, a 
European NGO focused on combatting human trafficking and 
labor exploitation, when Vietnamese workers have lost their 
factory jobs due to the economic downturn, they often owed 
large sums of money  This debt, coupled with the shame of 
returning home unsuccessful, has led many Vietnamese workers 
into poverty and the gray market.  Konecna said that fear of 
deportation or prosecution also deters them from seeking 
social services. Both Vietnamese community leaders and Czech 
government ministries struggle to estimate the number of such 
workers. (Note: Unlike most foreign laborers, who came to the 
CR with "work visas" tied to a specfic job, Vietnamese job 
agencies generally arrange "entrepeneurial visas" for their 
clients.  "Entrepreneurial visas" are much more flexible and 
not linked to any specific place of employment.  Thus unlike 
most other foreign workers, most Vietnamese do not lose their 
legal status within the CR when they lose their jobs. End 
Note.) 
 
----------------- 
Attracting Talent 
----------------- 
 
¶7. (SBU) In January 2009, the GOCR launched a green card 
program to attract third-country, skilled workers and 
expedite their arrival.  Vondracek estimates that to present, 
300 vacancies have been posted in CR's green card database of 
jobs that companies were unable to fill with Czechs or EU 
citizens.  While skilled, third-country workers, particularly 
in management-level positions, generally kept their jobs in 
the CR despite the economic slowdown, new, skilled positions 
appeared in lower numbers than were anticipated when the 
program was conceived.  Vondracek attributes sparse offerings 
and low participation to the state of the economy.  Still, 
MOI is optimistic.  Novotna says that her office is working 
on post-crisis management plans, to include new admission 
projects and public relations compaigns to attract both 
skilled and unskilled foreign workers after the economy 
recovers. 
 
------------------------------ 
Not Out of the Woods Yet 
------------------------------ 
 
¶8. (SBU) COMMENT: Foreign workers, who came here in the tens 
of thousands in 2007 and 2008, have been the first to lose 
their jobs as the Czech economy began to slow (the Czech 
economy is expected to contract by 4.3 percent for all of 
2009, following a sharp first quarter drop in manufacturing 
and exports).  As the Czech Republic's main export markets 
have fallen into recession, demand for Czech-produced 
products has plummeted.  While the worst of the economic 
slowdown may now be over, Czech unemployment, while still 
relatively modest, is expected to continue to grow.  Czech 
National Bank Chief Economist Tomas Holub stressed to us that 
unemployment tends to lag behind GDP by several quarters. 
Furthermore, the slow growth expected in 2010 (less than one 
percent) is unlikely to create many new jobs.  Thus, he 
expects unemployment to peak at nearly 10 percent in 2011. 
As unemployment continues to rise, the situation for foreign 
workers will become more difficult, potentially leading to 
more hardship, more crime, and more xenophobia. 
Thompson-Jones