Looking for a job in the IT area

Radka Vlčková

Jiří Voříšek

Department of Information Technology

University of Economics Prague

Published: April 1999

¨ Unemployment versus a lack of specialists

The Czech Republic was proud of an unemployment rate below the European Union limits three years ago. In fact, the unemployment rate is likely to stand at 9% at the end of this year. According to the Bureau of Labor unqualified and unskilled people have the most difficulties in finding a job. Surprising to some, figures of Ministry of Labor and Social Affairs show that a number of educated people who recently became unemployed is rising. There are also some graduates unsuccessfully looking for a job. The development of the labor market in the Czech Republic confirms the idea that unemployment has a structural character . The education system still does not come up with the needs and requirements of a labor demand.

Economists have declared that the spiraling salary trend was not followed by the same growth of productivity. This situation seems to be the main reason for an imbalance between labor supply and demand. Unemployment also leads to rising government costs for employment politics. European countries experienced with unemployment spend currently about 3% of their GDP on this account. The cost is 0.24% of GDP in the Czech Republic, therefore growth of this amount might be expected.

The situation is absolutely different in the labor market within IT industry. An expansion of this area means that there are still new requirements on human resources. New technology implementation and a rise of IT investments and information systems penetration give rise to a lack of IT specialists. Although Europe suffers from increasing unemployment, according to research done by IDC, there is a shortage of 200 000 workers in the IT area. This deficit might increase to up to 600 000 people before the year 2000. Czech companies had the most difficulty recruiting client/server designers and distributed database experts in 1996, as mentioned in results of Deloitte&Touche survey. System analysts, SAP professionals and other similar professions are non-available as well. Electronic commerce specialists might be the most required IT workers nowadays. This is also the expectation of the OECD. Its figures refer to a trend which brings the need of people able to combine their information technology knowledge with commercial abilities and economical orientation.

The following graph presents the profession structure of IS/IT workers according to a worldwide Deloitte&Touche survey conducted in 1996. The survey covered a broad spectrum of industries. The highest number of IT workers is dedicated to the implementation and maintenance of applications and database creation. As services are becoming more important, professions providing them will be more requested.

Graph Num.1 – Profession structure of IS/IT workers according to the worldwide survey conducted in 1996

Source: Deloitte&Touche

¨ Number of people engaged in IT area in the Czech Republic

The Czech Statistical Office does not provide exact numbers of IT workers in the IT area. Its surveys are based only on numbers and wage amounts of employees working for companies concentrating on “data analysis and coherent activities”. This simply means that this survey does not include employees of IT companies concentrating mainly on merchandise or computer manufacturing. IT specialists engaged in client companies departments are also not included in the statistics. For a proper explanation of stated figures, it is necessary to distinguish between the terms “employee” and “worker”. The term “worker” is wider and stands for “employee” and also all “entrepreneurs focusing in the branch”. Following the conditions of this paragraph there are 35 – 36 thousand workers within IS/IT.

Table Num.1 – Number of employees and workers engaged in companies focusing on data analysis and coherent activities in the Czech Republic in 1995 – 1997

Source: Czech Statistical Office

	1995	1996	1997
Employees	21 218	24 612	23 272
Entrepreneurs	10 478	12 124	11 774
Workers	31 696	36 736	35 046
% share in the CR	0,63%	0,73%	0,70%

It is impossible to talk about an increasing number of IS/IT workers according to these statistics. For a more sophisticated conclusion we would need figures collected during a longer period of time and mainly shortage of the IS/IT workers mentioned above. Generally said we might suppose an increasing number of people engaged in the IT area as IS/IT is becoming further more interesting for a business sector.

¨ IS/IT workers demographic structure and a fluctuation in the area

From a demographic point of view, the average age of IT chief executives in Central Europe is 40 years. Most of the IT entrepreneurs in the Czech Republic are 31 – 35 years old. Despite the fact that women account for 44% of all Czech workers, there are only 8.3% of women in the IT area. The percentage of women to all IT workers increased only 1% from 1994. Men held the majority in information technologies.

Staff fluctuation seems to be one of the biggest problems within IT area. According to studies of PriceWaterhouseCoopers this problem does not include only IT specialists, but it is typical for all of the Czech Republic. Sixty percent of questioned employees changed their job in 1997. This survey also indicates that 61,2% of employees have been working for one company four years less. The Czech Republic and Great Britain take the European lead in employee fluctuation.

Graph Num.2 –Staff fluctuation of IT workers

Source: Deloitte&Touche – worldwide survey

The fluctuation of IS/IT workers is about 12 – 13% in Central Europe and is decreasing. In comparison, the fluctuation of IT specialists in the Czech Republic reached 15% in 1996. The situation has changed since 1997 when the fluctuation in our republic fell to 6,4%. Companies intend to attract employees to keep them with the company. They offer salary and other benefits such as cars, computers, discounted meals and merchandise, insurance and pension plans, performance-based bonus schemes, etc. The main obstacle for companies to provide a wide range of these non-wage compensations is that the most of them are not tax-deductible costs.

¨ Salaries in IT area

Except for the work itself, wages or salaries are still the most important for us. The nominal wage for IS/IT workers in the Czech Republic is much higher than the average nominal wage, which was 11017Kč in 1997. The difference between the nominal wage in the Czech Republic and the nominal wage of IT specialists was 58,4%. Electronic equipment consultants earn the highest salaries in the branch. Otherwise their wages are falling. Contrary to this example the wages of SW consultants are sharply increasing. We suppose that this situation might have been caused by a general development within the IT area while there are increasingly more investments to SW and services than to HW.

Table Num.2 – Nominal average monthly salary and real salary of workers in companies focusing on data analysis and coherent activities in the Czech Republic in 1995 – 1997

Source: Czech Statistical Office, Market services department

	NOMINAL			REAL
	1995	1996	1997		1995	1996	1997
Average salary in the CR	8 172	9 610	11 017		7 498	8 112	8 586
Estimation for all subject in OKEC 72	11 906	17 926	17 449		10 924	15 131	13 599
Data analysis and coherent activities SUMMARY	12 498	16 370	19 909		11 467	13 817	15 517
Electronic equipment consultancy	16 416	29 353	24 942		15 061	24 776	19 439
SW implementation and cosultancy	14 236	19 663	21 882		13 061	16 597	17 054
Data analysis	10 231	12 607	15 531		9 387	10 641	12 104
Databanks	7 300	6 750	?		6 698	5 698	?
Office equipment and computers maintenance	9 427	14 503	14 399		8 649	12 242	11 222
Related and coherent activities	28 474	20 690	24 608		26 124	17 464	19 179

The figures of the Czech Statistical Office represent the estimation of all subjects with the main orientation 72 – Data analysis and coherent activities. The estimation is based on a survey carried out in 1995 and 1996 within companies employing 25 or more workers. Since 1997 the survey has been carried out within companies employing 20 or more workers. This means that these statistics are hardly comparable. The question mark stands for “individual data” - data collected from three or fewer subjects which are unpublished. Real wages are calculated using life cost index. Life cost index features average price development in society. Life cost index characterizes influence of changing prices to different social classes.

The wages of employees of companies focusing on data analysis and coherent activities fell in 1997. On the other side we have to point out that survey conditions changed this year and this fact might have had an important impact on the results. If we compare figures not including an estimated data for all subjects in the area (real collected data) we would find out that companies having more than 20 employees offer higher wages than smaller companies. Companies providing implementation and consultancy within SW industry offered higher wages in 1997.

There exists high demand of IS/IT specialists, which is far above possible supply at the labor market. This is a reason to offer very high wages to attract potential employees. Special compensations are added to a wage amount that was considered for this working position. It is sometimes also called “red circle rates”. Ten years ago we could observe the same issue connected to wages of accountants and managers. As demand rises up there, another increase of wages might be expected.

The next analysis based on the CSU survey is looking into a wage structure of chosen professions. Representative companies employing more than 20 and less than 999 workers participated in the survey done in 1997. Every company having more than 1000 was included in the survey. An estimation for all subject in the area was not done.

Table Num.3 – Average monthly wage structure (in 1997)

Source: Czech Statistical Office, Labor and wages

EMPLOYEES	Number of employees	Gross monthly salary	Netto monthly salary	Netto wage share	Variance coefficient
IS designers and analysts	715	19 882	14 589	73,38%	44,48%
Programmer	1 057	17 916	13 310	74,30%	46,23%
Other IT specialists	1 120	18 226	13 506	74,11%	50,22%

EMPLOYEES	Salary	Bonuses	Benefits	Wage substitutions	Others
IS designers and analysts	65,99%	2,90%	20,48%	8,94%	1,69%
Programmer	66,01%	3,30%	10,02%	8,87%	1,80%
Other IT specialists	64,90%	5,70%	19,28%	8,61%	1,51%

The average wage of IS designer and analysts is 2000 Kč higher than the average wage of programmers. Netto wage represents approximately 73 – 74% of a gross monthly salary. An average salary in the Czech Republic stands for 63,9% of the whole amount an employee receives. This share is generally 2 – 3% higher in case of IT workers. What is the impact of benefits and bonuses on a whole salary? IS designers and analysts receive 10% higher benefits than programmers. Wages of programmers are mainly fixed, contrary to this 20% of the wage of IS designers and analysts is dependant on their performance.

Amounts of wages differ also from regions where an IT company settles. An exact expression should be where a company focusing on data analysis and coherent activities settles.

Table Num.4 – Average monthly salary in different regions in 1997 (Kč)

Source: Czech Statistical Office, Market services department

REGION	Avg. Salary	REGION	Avg. Salary
Prague	22 622 Kè	Eastern Bohemia	15 195 Kè
Middle Bohemia	16 469 Kè	Southern Moravia	19 310 Kè
Southern Bohemia	20 162 Kè	Northern Moravia	15 820 Kè
Western Bohemia	11 375 Kè	SUMMARY	19 909 Kè
North Bohemia	10 521 Kè

Obviously, the highest salary can be required by IT specialists in Prague. According to statistics there is also the highest wage in the Czech Republic in the capital city. An unexpected situation is in Southern Bohemia and Southern Moravia. The average wage of IS/IT workers is in these regions more than 1000 Kč higher than in Middle Bohemia. The lowest wage is offered in Northern Bohemia. This region also suffers from the highest unemployment.

¨ The role of education system

An interesting and well-paid job might be attractive for many people concerned about information technology and systems. The education system should reflect the labor market and react actively. An IRDAC memorandum pointed out that high schools without sufficient practice affect cause unemployment of their students. The situation is probably better at universities. According to the Office for Information about Education, most of the students who obtained an A-level degree wanted to study at universities focusing on law, arts, social science and the humanities. In comparison to the past there are fewer people willing to attend teaching, medicine and economy. Technical fields are still not popular. It could be supposed that people with a combination of technical and economical education will not have to face problems with finding a job in the near future.

¨ Situation at universities in the Czech Republic

The situation is very similar in the Czech Republic as it is worldwide. The number of university students is increasing (table Num. 5, 6). Number in students of information technology and a percentage of these students to all graduated increases as well. As is obvious from the analysis above, the number of students of information technology is still not enough.

Table Num.5 – Number of university students and IT students in the Czech Republic

Source: Ministry of Education

Year	Sum in CR (C)	Informatics in CR (I)	I/C
94	159031	6385	4,01%
95	175656	8202	4,67%
96	192824	10068	5,22%
97	204432	10924	5,34%
98	213975	11915	5,57%

Table Num.6 – Number of graduated

Source: Ministry of Education

Year	Sum (C)	Informatics (I)	I/C
94	19635	1048	5,34%
95	19725	908	4,60%
96	23147	1154	4,99%
97	26010	1641	6,31%

Before we try to answer the question why such a situation exists let us have a look at the number of students of information technology and systems at particular universities (see table Num. 7).

Table Num.7 –Number of students according to a university

Source: Ministry of Education

University	1998	1997	1996	1995	1994
VŠE Prague – dept. of Informatics and statistics	1220	1222	1033	949	887
ČVUT Prague – dept.of Electrotechnic	1169	1107	1056	1002	774
VŠP Hradec Králové – dept. of IT management	936	882	817	613	152
VUT Brno – dept. of Elekt. and informatics	892	850	896	507	476
MU Brno – dept. Informatics	860	666	461	332	249
UK Praha – dept. Maths- Physics	851	824	828	750	702
ČZU Praha – dept. Economics	478	441	400	291	210
ZČU Plzeň – dept. Applied sciences	405	390	417	429	384
VŠB-TU Ostrava – dept. Elect and Informatics	383	238	195	113	125
UP Olomouc – dept. Naturalistic	289	250	235	211	184
All universities offering IT education	11915	10924	10068	8202	6385

It is possible to study information technology and systems at almost every university – there are around 44 faculties at 19 universities in the Czech Republic. Fifty percent of these students attend six universities – VŠE Prague, ČVUT Prague, VŠP Hradec Králové, VUT Brno, MU Brno and UK Prague.

Table Num.8 – Number of candidates and number of accepted to study IT in 1998

Source: Ministry of Education

University	Accepted	Candidates	A / C
VŠE Prague – dept. of Informatics and statistics	434	1338	0,32
ČVUT Prague – dept.of Electrotechnic	400	3002	0,13
VŠP Hradec Králové – dept. of IT management	559	1389	0,40
VUT Brno – dept. of Elekt. and informatics	324	949	0,34
MU Brno – dept. Informatics	220	1148	0,19
UK Praha – dept. Maths- Physics	124	498	0,25
ČZU Praha – dept. Economics	3564	13173	0,27
ZČU Plzeň – dept. Applied sciences
VŠB-TU Ostrava – dept. Elect and Informatics
UP Olomouc – dept. Naturalistic
All universities offering IT education

As we can see from table Num.8 above, the reason of insufficient number of graduates of IT is not a lack of student interest.

The reason must be in a low flexibility of universities as they react to changes in structure of demand for various specialist on labor market. The solution to this issue is not only an increase of university capacity but a combination of information studies and other fields such as economy.

Graduates with convenient specialization are not the only solution of the problem of a lack of specialists in IS/IT area. Development in this branch is continuos and very dynamic. It has to be taken into consideration that the process of education is not finished after graduation. Development of technologies, methodology and new approaches to IS/IT management requires the ability of continuos improvement of qualifications for a perfect orientation in this area.

Literature and sources

· Wages of employees in 1997, CSU

· CSU, Department of market services, Numbers of employees

· Analysis of entrepreneur activities in 1992 - 1995

· CSU, Department of market services, Average monthly wages in companies OKEC

[SR98] Statistics overview CR ´98, CSU

[D&TG98] Deloitte&Touche, 1998 Global Suvey of Chief Information Executives

[D&TG96] Deloitte&Touche, 1996, Global Survey

[D&T94] Deloitte&Touche, 1994/95, IT trends in Central and Eastern Europe

[D&T96] Deloitte&Touche, 1996, IT trends in world and in the CR

[PWC] Ekonom 51/1998, PricewaterhouseCoopers: We break records in employees’ fluctuation