Czech Republic Sees Record Number of Self-Employed Workers in 15 Years

The number of self-employed individuals in the Czech Republic has risen again, reaching its highest level in the past 15 years. By the end of 2024, authorities registered nearly 28,000 more self-employed people than in 2023.

Experts attribute this record increase primarily to confusion over work performance contracts. According to data from the Czech Social Security Administration (ČSSZ), the total number of self-employed individuals in the country now stands at 1.155 million.

Number of Primary Self-Employed Workers in the Czech Republic Rises by 13,000

According to data from the Czech Social Security Administration (ČSSZ), the number of sole proprietors in the Czech Republic reached 681,351 by the end of 2024 – an increase of nearly 13,000 compared to the previous year. This marks the highest year-end figure for primary self-employment since 2009, when ČSSZ began publishing data.

Growth in Self-Employment as a Secondary Income Source

As of December 31, 2024, there were 473,526 sole proprietors in the Czech Republic who used self-employment as a supplementary source of income. This is the highest number recorded since 2011.

In total, 1,154,880 self-employed individuals were registered in the country at the end of 2024 – almost 28,000 more than the previous year. However, this number is 4,000 lower than the record high at the end of September 2024.

This decline follows a regular seasonal trend, as many entrepreneurs close or suspend their businesses at the end of the calendar year. In contrast, the summer months typically see an increase in self-employment due to seasonal work.

Entrepreneurship as an Additional Source of Income

For pension insurance purposes, self-employment is considered non-primary if, during the calendar year, the individual:

• Was employed and performed work for hire
• Received a disability pension or an old-age pension
• Received child care allowance, maternity allowance, or sickness allowance (if covered by insurance) or cared for a child under 10 years old or another person requiring constant care
• Served in the armed forces of the Czech Republic (excluding professional soldiers or those in civilian service)
• Was a dependent child.

The Schwarz System: The Main Driver Behind the Rise in Self-Employment

Experts point out that the increase in the number of self-employed people is largely due to the Schwarz system, a practice where traditional employment relationships are converted into contracts between a service provider and a client. This shift is a natural response to high labor taxes, growing bureaucracy, and increasing employer obligations. According to Miroslav Diro, spokesperson for the Czech Chamber of Commerce, the Schwarz system is particularly common in IT, construction, transport, logistics, media, and even public administration.

In addition, last year’s changes to contracts for the performance of work played a major role in this trend. These contracts became more expensive, requiring holiday pay, and administratively more complex due to new mandatory reporting requirements. Further restrictions were originally planned for 2025, making the contracts even less attractive, and although the government ultimately backed down, many companies had already begun phasing them out.

A survey conducted last spring by the Czech Chamber of Commerce among 457 companies showed that most employers responded to these changes by reducing contract-based employment. Many chose to redistribute work among existing employees, hire self-employed individuals, or transition contract workers to part-time or full-time positions. Large companies with over 250 employees were the most likely to reduce contract jobs. Businesses in the personal services sector were the fastest to adapt, with only a fifth maintaining their previous number of contract workers, while in other industries, a significantly higher percentage made no changes.

Changes in Contracts for the Performance of Work

Other data indicate that changes in contracts for the performance of work are a key factor behind the recent rise in the number of entrepreneurs. Unlike previous years, this increase has been driven primarily by individuals for whom entrepreneurship is not their main source of income – groups that often worked under such contracts.

Data from CRIF – the Czech Credit Bureau – also show that 82,893 people started their own businesses last year, marking a 14% increase compared to the previous year and the highest figure in recent years. At the same time, many sole proprietors closed their businesses.

However, in years not influenced by administrative measures, the number of new entrepreneurs grew at a faster rate than last year. The previous decline in entrepreneurship was replaced by modest growth, which may have been partially driven by companies shifting workers to business licenses to cut costs, as well as changes in contract work regulations. Additionally, some lenders prefer issuing loans to individuals with an IČO, as these loans are not subject to the Consumer Credit Act, according to a CRIF press release.

Almost 50% of those who closed their businesses were over 61 years old, though the share of this age group in business closures has been decreasing year by year. Conversely, the proportion of young entrepreneurs aged 18 to 30 grew from a stable 2% in previous years to 7% in 2024. Notably, this youngest age group accounted for more than half (52%) of new business registrations last year, suggesting that contract changes played a key role, as younger individuals are more likely to work on a temporary basis.

Moreover, compared to 2023, the share of entrepreneurs who had been in business for no more than five years tripled. In 2024, they made up 15% of those who left self-employment, further highlighting that an increasing number of self-employed individuals view business as a short-term alternative to other forms of employment or temporary earnings.P.S. Need expert advice on taxation and business in the Czech Republic? Reach out to the professionals at 360WEDO. Just submit your request on our website, and we’ll get back to you promptly. We also provide comprehensive outsourced accounting services to support your business.

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