Social dialogue and the public
services in the aftermath of the
economic crisis: strengthening
partnership in an era of austerity
in the Czech Republic
National report
Zuzana Dvorakova* and Alexandra Stroleny**
*VŠE University of Economics, Prague
** King’s College, London
December 2012
European Commission project
Coordinated by Professor Stephen Bach, King’s College, London
‘Industrial Relations and Social Dialogue’
VP/2011/00
Table of Contents
Summary .................................................................................................................................... 1
1. Introduction ........................................................................................................................... 1
The responsibilities for public services and the size of the sector ........................................... 2
Regions ................................................................................................................................ 2
Municipalities ...................................................................................................................... 2
Main features of public sector social dialogue ....................................................................... 4
National ............................................................................................................................... 5
Pay ....................................................................................................................................... 6
Sectoral vs. Organisational/enterprise level........................................................................ 7
2. Drivers and Measures of Austerity ....................................................................................... 8
Main Drivers ............................................................................................................................ 8
Measures ................................................................................................................................. 8
Main measures as of 2011 ...................................................................................................... 9
Wages .................................................................................................................................. 9
Consequences for social dialogue ...................................................................................... 10
Pension Reform .................................................................................................................. 11
Current developments: 2013- 2015 budget ......................................................................... 12
Other current developments:............................................................................................. 12
Trade union responses .......................................................................................................... 12
Industrial relations in the health care sector ........................................................................ 14
Trends in the health care ................................................................................................... 14
Social partners and collective bargaining .......................................................................... 15
Views of the social partners on changes in the health care .............................................. 16
Current situation in the Civil Service ..................................................................................... 16
Consequences of austerity measures ................................................................................ 17
3. a Local Government ............................................................................................................. 17
Background: local government reform ................................................................................. 17
Local government - social dialogue ...................................................................................... 19
Fiscal restrictions ................................................................................................................... 20
Annual change of revenue and expenditure of municipal authorities .............................. 20
Annual change in income items in the budgets of municipalities (excluding Prague) ...... 21
Tax revenue and grants ..................................................................................................... 21
Income growth rates of municipalities .............................................................................. 22
Growth rate of expenditure of municipalities ................................................................... 23
Debt ................................................................................................................................... 23
Consequences of fiscal restrictions ....................................................................................... 23
Differential impact of fiscal restrictions ............................................................................ 24
3.b Case studies ....................................................................................................................... 25
Background Information: ................................................................................................... 25
Vsetín .................................................................................................................................... 25
Employment reductions ..................................................................................................... 25
Reduction in wages ............................................................................................................ 25
Productivity ........................................................................................................................ 25
Organisational Change ...................................................................................................... 26
Brno ....................................................................................................................................... 26
Survey: Reactions of the social partners - Trade unions and employees’ satisfaction in
municipal authorities ............................................................................................................ 27
Impact on service quality ...................................................................................................... 29
4. Discussion and conclusion ................................................................................................... 29
References: .............................................................................................................................. 31
Appendices............................................................................................................................... 36
List of Tables
Table 1: Average Number of Employees in the Czech Republic by institutional sector
Table 2: Outlook for balances (2011)
Table 3: Labour disputes in the Czech Republic - Examples
Table 4 Total income - Annual change (%)
List of Figures
Figure 1: Annual change of revenue and expenditure of municipal authorities
Figure 2: Annual change in income items in the budgets of municipalities (excluding
Prague)
Figure 3: Annual change in tax revenues of municipalities (excluding Prague)
Figure 4: Annual change: grants to municipalities (excluding Prague)
Figure 5: Central and local government employment levels
List of Boxes
Box 1: The Czech Republic Labour Code
Box 2: Key changes to Pension provision
Box 3: Local government financing
Summary
While taking into account the influence of long-term public sector reform, from the fall of
Communism and beyond, this report analyses the impact of the economic crisis on social
dialogue in the Czech Republic. In particular, it focuses on the following underlying research
questions:
1. What changes have there been in terms of job levels, terms and conditions of
employment and patterns of work organisation?
2. How have these changes been implemented and to what extent has social dialogue
contributed to the change process at national, sectoral and local level?
3. How have institutions of social dialogue influenced industrial relations processes/
outcomes in the public services?
Although the Czech financial sector is stable and has not been immediately impacted by the
financial crisis, there are pressures on public sector finances as well as pressure for reform,
however only partly stemming from the advent of the economic crisis. After a period of
political uncertainty, in 2010 the newly elected has introduced a set of austerity measures in
a pursuit to fiscal consolidation. This report considers the quantitative and qualitative nature
of these measures as well as the main underlying drivers, while also recognising longer term
influences on reforms of public sector employment relations (i.e. demographic changes with
an aging population putting increased pressure on public expenditure) and the specific legal
peculiarities in the Czech context. Overall, since dialogue at the national and sectoral level is
very limited as institutions of social dialogue are either non-existent or rather a mere
formality, but there is generally scope collective bargaining at organisational level.
1. Introduction
Central and local government form an important part of the Czech public sector. There has
been extensive reform since the fall of communism (i.e. since the 1990s) accompanied by a
drive to democratise and create structures that allow citizen engagement with the state. As
a country which is still in transition, it can be argued that many of the measures introduced
since the crisis are linked to structural reforms rather than solely to austerity. Nevertheless,
the impact of the crisis is significant and particularly since 2010 the newly elected
government has implemented fiscal consolidation measures specifically related to austerity
and the crisis. Social unrest and demonstrations against the government’s measures and a
degree of political instability indicate the challenges associated with this approach. Although
proposed measures have been subject to frequent change, social dialogue, particularly with
trade unions is very limited, both in terms of quality and quantity. Collective bargaining in
the public sector has a very uncertain status because of the dominant role of the Labour
Code and the limited role of employers in pay determination. Whilst consultation and
dialogue with the State may take place at national level, the government ultimately
establishes pay and conditions and other key terms and conditions for the whole public
sector workforce in accordance with the Labour Code (ECOTEC, 2006). Within local
government, additional benefits can be negotiated and bargained for at the organisational
level – between the individual municipality and trade unions - although the scope of
enterprise agreements is limited and set within clear legal parameters. The main measures
1
affecting the public sector workforce relate to pension reform, a 10 per cent budget cut, as
well as a pay freeze until 2014.
The responsibilities for public services and the size of the sector
According to DGAFP (2008) the Czech public sector can essentially be divided into two broad
categories: central/state administration (central government) and territorial self-governing
units (local government, including municipalities and regions). This is broadly in line with
Špacek’s and Špalek (2007) definition of public administration in the Czech Republic (see
graph Appendix 1, cited in Spacek et al., 2007) consisting of state administration (central
government) and self-government (local government). Nonetheless, it is important to
recognise the fact that there is no common definition or concept of the ‘public sector’ in the
Czech Republic. The concept of public service is used in the labour relations domain to
identify the legal status of public employees (public servants). For the purpose of this
research at least- in the Czech context the terms ‘public sector’ and ‘public administration’
are used almost interchangeably.
Within local government, the regions and municipalities may, in addition to their own
functions, have to exercise some state functions i.e. activities related to central
administration - in this case, competences are delegated from the state administration level
to local level (Public Governance Committee, 2005). As Spacek et al (2007) notes “this may
lead to the complexity that is hard to coordinate and that also causes conflicts of roles inside
such bodies” (p.4). For further information on the different services provided by local
government (self-government) and the state administration (central government)
respectively, see Appendix 2.
Regions
As illustrated in Figure 1 (appendix 1), within local government another important
differentiation is between the regions and municipalities (DGAFP, 2008). Previously, districts
have also been a formal component of local government (until 2003) but as with public
sector more broadly, so the structure of local government has experienced frequent changes
since the fall of communism (which will be discussed below). Nevertheless, the regions have
responsibility for upper secondary education, public roads and transport, health care/
general hospitals, and social aid and some social policies for disadvantaged groups (DGAFP,
2008; OECD, 2011).
Municipalities
The municipalities on the other hand, broadly, provide services relating to agriculture,
primary education as well as pre-school and lower secondary education, housing and public
transport, social care services, local roads, water and energy supply and waste collection and
treatment facilities (DGAFP, 2008; OECD, 2011).
The scope of municipalities’ responsibilities and activities differ from a basic level of
responsibilities (type I), to ‘commissioned’ responsibilities (type II), to extended delegated
powers (type iii) (Public Governance Committee, 2005). Type III is the newest category and
stems from the abolition of district authorities and municipalities ‘joining up’ some of their
services and co-operating, itself related to the comparably small size of municipalities
(OECD, 2011). Local governments are also free to form partnerships with the private sector.
2
Significantly, this is a growing trend. In the 1980s/1990s most public services were provided
directly by municipalities, but directly, Fanta et al. (2008) reported that a significant
proportion of public services, i.e. waste collection, public spaces and lightning, roads,
cemeteries and sanitation were outsourced, amounting to more than 55 per cent of total
expenditure.
For further information on the structure of regions and municipalities see appendix 7 and for
a comparison of the main employment relations- differences for municipal public servants
and private sector employees see appendix 8.
1.1 Public sector employment levels
The Czech Statistical Office distinguishes between the business and the non-business
sectors. While public services may be provided by the business sector (via outsourcing etc),
the focus here is on the non-business sector which consists of government and ‘Non-profit
institutions serving households’. Of particular importance is the government sector which
includes central and local government and Social Security funds. Central and local
government comprise the overwhelming majority of employees within the non-business
sector (Table 1).
As Table 1 indicates employment levels have been falling in the non-business sector since
2010, following the accession of the new government (see section 3 for more discussion).
This decline can be mainly accounted for by a decrease in government employees as
employment in non-profit institutions has been increasing since 2009 and increased by 10.5
per cent between 2010 and 2012.
In contrast to central government, where there has been a decline of 1.7 per cent between
2010 and 2012 (second quarter), local government employment has fallen more rapidly with
levels falling by 8.5 per cent in the same period. Taking a longer-term view, there had also
been a drastic decline in local government employment in the previous year (2009) of
approximately 9.4 per cent, resulting in an overall decline of approximately 17 percent in the
2009 to 2012 period in local government.
Table 1: Average Number of Employees in the Czech Republic by institutional sector
Czech Republic: Population:
10,177,300 (July 2012 est.)
*2008
(Q2)
headcount (actual persons)
2009
2010
2011
(Q2)
(Q2)
(Q2)
2012
(Q2)
% change
2009- 20102012
2012
TOTAL ECONOMY
3,357,701 3,983,200 3,904,800 3,899,000 3,904,900
-2.0
0.003
THE NON-BUSINESS SPHERE (1+2)
745,200
753,200
739,500
717,900
-3.7
-4.7
1. Government (a + b + c)
701,100
703,600
684,900
663,200
-5.4
-5.7
a) Central
288,464
247,200
291,600
279,300
286,800
16.0
-1.7
b) Local
399,791
446,700
404,700
398,600
370,200
-17.1
-8.5
c) Social Security funds
7,300
7,200
7,000
6,300
-13.7
-12.5
2. Non-profit institutions serving
44,100
49,600
54,600
54,800
24.3
10.5
households
Source: Czech Statistical Office
* In 2008, the non-business sphere was being defined differently by the Czech Statistical Office and as such this
data is incomplete.
3
20112012
0.2
-2.9
-3.2
2.7
-7.1
-10
0.4
Main features of public sector social dialogue
Public sector employment relations in the Czech Republic is characterised by a sovereign
employer tradition. There is little tradition of joint regulation and collective bargaining. As
Baccaro and Heeb (2011) suggest, like other former communist countries, there is also no
tradition of tripartite social dialogue. Tripartite negotiations took place first in the 1990s and
early 2000s but were solely of a symbolic nature and have rarely resulted in meaningful
social pacts. Rather, there is an emphasis on the law which regulates relations between the
Box 1: The Czech Republic Labour Code
The Labour Code regulates amongst other things: duration and termination of employment,
working discipline, working conditions, working hours, breaks at work, overtime work, night
work and sick leave. It also regulates common provisions on wage, salary and remuneration,
and deals with issues relating to occupational health and safety, employee care, female and
juvenile workers' working conditions, labour disputes, compensation for damage. In
addition, the Labour Code as amended in 2001 introduced a new type of employee
representation in an undertaking where there is no trade union organisation in operation namely a works council and a representative concerned with occupational safety and health
protection can be elected. The Labour Code provides for the procedure for the election of
the representatives of a works council as well as the minimum and maximum number of
members of a works council, but only when employees’ interests cannot be represented by
a trade union. Works councils have a subsidiary status to trade union representation. Works
councils “only act as a mediator between the employers and their employees, in order to
ease the flow of information and consultation”. Only trade unions have collective bargaining
rights (Youngmo, 2011). The labour code provides for the basic trade union rights (Baccaro
et al., 2011). For details see http://www.mpsv.cz/files/clanky/3221/Labour_Code_2012.pdf.
Collective Bargaining Act
Common legal provisions on collective bargaining were laid down in the time of overall
social reforms. The Act 2/1991 of Col., on Collective Bargaining regulates collective labour
relations in both business and public sectors and has not been substantially modified. The
Collective Bargaining Act regulates the collective negotiations between the social partners
and regulates the requisites and procedures with regards to concluding a collective
agreements as well as collective disputes (Kuncová, 2010). As Youngmo(2011) suggests,
other forms of collective bargaining are part of social dialogue and are not subject to
legislative regulation and are in practice governed by the partners’ procedural customs.
Generally, “labour law entitlements other than wages which can be agreed on at a level
going beyond the scope defined by law include e.g.
- Reducing working hours below the number stipulated by the Labour Code.
- Extending vacations with additional weeks.
- Increasing entitlement to paid leave/ salary for some acts in the public interest.
- Extending leave of absence and subsidies for training and vocational study and for time off
owing to serious personal reasons, etc.” (Youngmo 2011: 55)
Collective agreements, especially at organisational level, may address a wide range of issues
such as the reduction of working hours without reducing wages and leave entitlement and
may also cover employment conditions (fixed-term, part-time, temporary agency work).
4
Furthermore, social policy issues (e.g. employee transport, continuous vocational training,
health and safety) are also often considered in collective agreements.
social partners. More precisely, while there are several labour law regulations, the relations
between employees and employers in the Czech Republic are governed by two main acts
which apply to both the public and private sector employees: the Labour Code and the
Collective Bargaining Act (see Box 1) .
Although there has been progress with regards to “new form of mutual interaction”
between the state, employers, and citizens, one must bear in mind that the Czech Republic
has been subject to an authoritarian system for four decades in which the state was
responsible for managing society as a whole including law, employment etc. As Fanta et al.
(2008: 66) state: “The strong paternalism of that time has not been eliminated and in some
areas, not even affected (...) although the state has given place to the private and civic
sector over the last 17 years, a change in its authority, control of efficiency of public
administration and reformation of its functional failures still remain subject of intense
political and civic discussion”.
National
For both the public as well as the private sector, the main forum for social dialogue at
national level is the national tripartite Council of Economic and Social Agreement (Rada
hospodářské a sociální dohody, RHSD), also called ‘Tripartite’ (Eurofound, 2009). This council
played a particularly important role between 1990 and 1995 as it dealt with issues such as
pensions, employment, the regulation of wages, collective bargaining, and the Labour code.
Its importance however decreased rapidly as government attempted to limit its influence
only to re-gain its importance in 1997 when economic conditions worsened and a weak
minority (later coalition) government was in place.
Although the government enters into discussions nationally with trade unions on wage
issues, the nature of these discussions in the public sector are characterised by information
and consultation, rather than collective bargaining; these exchanges cannot result in a
collective agreement (Veverková, 2011). It can be argued that trade unions act as pressure
groups in the public sector (Tomes, 2004) at this level rather than being involved in collective
bargaining. Although referring to involvement of social partners in labour administrations
(labour ministries / public employment services), according to Heyes (2011), the social
partners are usually given the chance to comment on proposed changes to Czech legislation
and present their positions at the RHSD, and there is also a general obligation for the
government to consult the social partners on draft legislation, however in practice
governments that do not want to consult feel little obligation to consult. The 2006-9
government headed by Prime Minister Topolánek, for example, tended to present proposals
to Parliament without first discussing them with the social partners. The subsequent 200910 ‘caretaker government’ headed by prime minster Fischer, by contrast, placed greater
emphasis on social dialogue and discussion. The position of the current government is less
supportive of social dialogue and social dialogue is once again taking a backseat in the Czech
Republic at national level.
5
Although not having had a significant impact upon current developments, under the
government led by Fischer the government and social partners agreed upon 38 suggestions
for short-term measures with regards to the economic crisis at a tripartite meeting on 2
February 2010. Despite some dispute among government ministers, the government finally
adopted the document during its session on 8 February 2010. Baccaro et al. (2011:15)
commented that: “surprisingly given the country’s record, the response to the financial crisis
has taken the form of national social dialogue. In 2009, unions and employer organizations
took the initiative of presenting the government with a set of jointly-negotiated measures”
to tackle the crisis, maintain aggregate demand and lower unemployment. The social
partners later criticized the implementation of the 38 measures as inadequate, as the new
government headed by Necas which took office in mid-2010 refused to fully implement
these measures .
Nevertheless, the relations between the Government and the CMKOS (the main trade union
for public and private sector employees) are currently rather strained in the wake of ongoing
reductions in the state budget and the absence of meaningful social dialogue. This has
resulted in several protests and strikes in recent years. Despite this apparent disagreement
of trade unions with government proposals, the reforms and budget cut measures are
usually enforced by the right-wing government that has the support of the majority of rightwing parties in the Chamber of Deputies of the Czech Republic.
Pay
Public sector pay and pay scales are established centrally in the Czech Republic. Therefore
the room for collective bargaining on pay is very limited. Since 1st January 2007 the
compensation of employees in public administration is regulated by Act No. 262/2006, the
Labour Code1. Employees are classified into 16 salary grades which are differentiated by
complexity, responsibility and are based on qualification requirements. There are 12 salary
levels within each grade with progression based on length of service. Combining the salary
scale and the level generates an individual pay tariff which corresponds to a particular
salary. In this respect the Czech system resembles the famous French wage grille system as
these salary scales generate fixed tariffs. The employee is ranked in the salary grade,
according to the job description and required qualifications, and on a salary level in
accordance with years of recognized practice. The law thus prescribes strict rules for
determining the employees’ salary and the employer must follow them. Each group of PA
employees has different salary scales. Since 1st January 2011, however, some flexibility has
been introduced and the employer can also use a special method of determining the salary
rate in public administration, which in this case is determined within the range of salary
rates set for the lowest to the highest level of the salary level of the salary grade.2 Another
important change is to supplement this salary with additional compensation if certain
conditions are met. This can result in a 13th and 14th month salary bonuses.
1
Act No. 262/2006, Labour Code, as amended, and other regulations, including Government regulation No.
564/2006, of salaries in public services and administration, as amended, and Government regulation No.
222/2010, which defined the catalogue of jobs.
2
Government regulation No. 381/2010 Sb., which changes Government regulation No. 564/2006. (Full text of
the later regulation [on line]. Accessed from Internet http://www.mpsv.cz/ppropo.php?ID=nv564_2006.
6
Incentive pays defined by the Labour Code can enable some appraisal of performance and
allow variable pay depending on work results. The employee, who achieves very good
performance in the long term, can be rewarded by merit pay - the employer may provide
such an incentive pay up to 50 per cent salary rate of the highest pay level in the salary
grade in which the employee is ranked3. If an employee is a highly qualified professional and
included at least in the tenth salary grade and higher, his/her merit pay can reach up to 100
per cent salary rate4. Grades are a total of 16, but in municipal authorities employees are
ranked up to 15 grades because job requirements for the highest salary grade is reserved for
jobs in civil service.
Sectoral vs. Organisational/enterprise level
Collective bargaining mainly occurs in the private sector. The scale of bargaining at the
enterprise/organisational level in the public sector is highly restricted, as it can only be
bargained within the specific legislative framework and e.g. pay and other welfare provisions
are determined centrally. While most legislation concerning industrial relations in the public
sector has been developed in the early 1990s, the Labour Code of 2007 sets out i.e. basic
terms of employment, maximum working hours, minimum annual leave. Terms and
conditions can be agreed in a more favourable way in collective agreements however only at
enterprise/organisational level.
In the Czech Republic sectoral-level collective agreements cannot be negotiated in the public
services because trade unions have no contractual partner, i.e. no corresponding employers’
association has been established. In the case of the civil service the reason stems from
Czech law that inhibits an establishment of employers` associations on the side of the civil
service.5 So trade unions cannot bargain for working, social and wage conditions in sectoral/
higher-level collective agreements and only enterprise level collective agreements are
concluded in these sectors.
According to Tomes (2004) enterprise-level collective agreements are generally preferred as
these take the specific local context into account and are more concrete. Enterprise level
collective agreements have actually been a long-term feature of industrial relations in the
Czech Republic as these were to some extent even concluded during the communist era.
However, enterprise-level collective agreements are not in the public domain and therefore
not easily obtainable because social partners have no obligation to publish them. Based on
common bargaining practice in the Czech economy we can deduce that most of the
enterprise-level collective agreements deal with the regulation of working hours, payment
for extra work, enterprise social care (in particular providing benefits like luncheon vouchers,
pension insurance, life insurance etc.) and bonuses.
In sum, drawing on Clegg’s dimensions of collective bargaining, it can be concluded that in
the Czech public sector collective bargaining occurs mainly at the organisational/ enterprise
level. Pay and terms and conditions of employment are discussed, but not negotiated at
national level. The reason is that there is no legal regulation/no law framework for
negotiation at national level and it depends on the Government how their members view
3
See § 131, the first par,the Labour Code.
See § 131, the second par, the Labour Code.
5
§ 5 Act No. 83/1990, Act on Association of Citizens.
4
7
the role of trade unions in the economy as well as social dialogue. The right-wing
governments have rejected any social dialogue. There is also no sectoral level collective
bargaining, however organisational/enterprise level collective bargaining is possible and can
be estimated to occur in around 20-30 per cent of cases in the local government sector.
Once a collective agreement has been concluded it is legally binding. Such collective
agreements would mostly cover non-pay terms and conditions (working hours etc.) as all
public sector employees have their basic pay and conditions determined centrally
The scope of collective agreements is the same today as before the crisis as the law is almost
unchanged, but potentially greater scope exist in terms of pay after 2011 (discussed below).
2. Drivers and Measures of Austerity
Main Drivers
The Czech Republic has been affected by the recent crisis, most importantly due to
weakened export/external trade. This has had an adverse effect on the debt ratio and
budget deficit, in particular since 2009. Thereafter the government has focused on the
implementation of deep budgetary cuts, however it has also implemented measures on the
revenue side including changes to the tax system as well as e.g. anti-corruption measures
(OECD, 2011; BTI, 2012). The measures implemented are also related to meet the objective
of the Europe 2020 Strategy (Úřad vlády ČR, 2011) as well as to meet the criteria as set out
in the EU Stability and Growth Pact (Hold, 2010) – i.e. debt below 60 per cent of GDP and
annual deficit below 3 per cent.
While the Czech government had been carrying out a reform of public finances since 2004
(Fanta et al., 2008), there are several drivers that influence and accelerate the need to
manage public expenditure through efficiency improvements, including slow growth in the
medium- to long-term due to diminishing opportunities for real economic convergence and
an ageing population (OECD, 2011). Further drivers that accelerate the need for expenditure
control relate to the long-term expected increases of public spending on pensions and
health care linked to ageing. In fact, the Czech Republic faces particularly significant
demographic challenges as it is projected to have one of the highest old-age dependency
ratios by 2050 within the OECD (Fanta et al., 2008) and therefore pension reform is a high
priority. Furthermore, as already prior to the recession the total tax burden was comparably
high (at or even just above that of high-income countries such as Germany, Spain and the
UK) the focus lies substantially on the expenditure side of the budget (OECD, 2011: 46).
Measures
Overall it can be said that the world economic crisis has had a great impact on the Czech
Republic. In 2009 the economic crisis took its effect in the Czech Republic as debt and deficit
figures significantly deteriorated (budget deficit = 5.93 per cent of GDP; 4.8 per cent in 2010
and a deficit of 3.1 per cent in 2011). However, key reforms had been delayed as “The
Topolánek government’s attempts at reforming the health, pensions, law enforcement and
legal systems have been constrained by its status as a Minimum Winning Coalition
government” (BTI, 2012: 3). In March 2009, after a vote of no confidence the coalition
government [Civic Democratics Party (ODS) and The Christian and Democratic Union (KDU8
CSL) and Green Party] under Topolanek (2006-2009) fell due to competition between the
centre-right government and the opposition as well as policy disagreements within the
coalition, regarding the issues of pension and health care reforms and the ways in which the
crisis is being managed and relating to the issue of further EU integration. The fall of the
government and also “the limited mandate of the Fischer caretaker government” (20092010) (BTI, 2012: 3) caused further delays until elections in May 2010.
Since 2010, the current coalition government headed by Necas adopted several measures
specifically relating to austerity. In fact, the current government coalition (at first made up of
three right-wing parties – ODS, TOP 09 and VV – now also includes LIDEM, as VV fragmented
and a group of former VV members established a new political party LIDEM in May 2012)
which has declared itself the “government of budgetary responsibility” (BTI, 2012: 19), when
elected in 2010 it argued that the most pressing issue was to reform public finances and
drive down public debt. The focus has been on fiscal consolidation – specifically shrinking
the budget deficit (from 5.3 per cent GDP to 4.6 per cent in 2011; planned 3,5 per cent
budget deficit in 2012 that was corrected to 3 per cent in April 2012) - with significant effects
on public service sector employment and working conditions.
Table 2: Outlook for balances (2011)
in % of GDP
General government
balance
2011
-4,2
2012
-3,5
2013
-2,9
2014
-1,9
Source: Ministry of Finance, available at http://ec.europa.eu/europe2020/pdf/nrp/nrp_czech_en.pdf
Main measures as of 2011
Wages
At the end of 2010 the government enforced the first set of austerity laws under an
emergency regime, that took effect in January 2011 (Contiguglia, 2011). Measures included
changes to the system of taxes, together with the abolition of some tax reliefs and the
enforcement of higher taxation elsewhere, changes to the welfare and benefits system and a
5 per cent cut to subsidies paid to political parties and movements. However, the
constitutional court in March 2011 declared the way in which these changes were
introduced was unconstitutional, but not the measures themselves (BTI, 2012; Pelcova,
2011). (See appendix 3 for list of measures). This decision partly reflects the fact that
dialogue, involvement and consultation with the trade unions on a national level was absent,
which led to widespread demonstrations and protests against unilaterally imposed measures
(Salzmann, 2010).
Although a variety of austerity measures have been implemented, one of the most
controversial ones is a 10 percent cut in the budget for public-sector wages – the aim was
that this measure alone would contribute to a saving of 21 billion Kč in 2011 (832 million
EUR) (Contiguglia, 2011)- and it affects the whole public sector workforce with the exception
of teachers (Vláda Ceske Republiky, 2010) . Moreover, public sector pay was to frozen until
2014. As indicated in a letter to the Czech government by the Trade Union of the Health
9
Service and Social Care of the Czech Republic, there has been no meaningful negotiation
around the 10 per cent pay cut or related measures.
However, this cut is not only linked to austerity but also related to government’s attempt to
reform the pay system due to the “pressure to move away from a pay system based on
service related progression to one based on assessment” (EPSU 2012: 1). In addition, the
shift from automatic progression to a pay system based on merit and performance appraisal
implies the attempt to widen the wage gap between higher and lower paid employees. First
attempts to make changes in 2010 however caused union opposition which in turn forced
the government into a partial retreat. Nevertheless, from 1st January 2011 there was
legislation that impacted on public sector pay.
As noted above employees in the public sector were paid in accordance with their grade (16
grades) with progression based on experience (12 steps or levels). The government
proposed to abolish the 12 steps and to link the mandatory (i.e. basic) pay only with the
level of qualification of an employee, which might be complemented with (non-mandatory)
extra bonuses and premiums. As a consequence, experienced workers would lose out
dramatically (EPSU, 2010). Eventually, changes came into force as of 1st Jan 2011. Generally,
many of the changes effective from this date, including those which were linked to
amendments to the Labour code, have actually been less extensive than originally set out by
the government (Veverková 2011b). Yet, in terms of changes relating to salaries in public
administration, changes have been presented as a consequence of austerity including the
measure of the Government in connection with a curtailment of public budgets - the
planned reduction of salaries by 10 % for territorial self-governing units. In addition to the
10% cut in pay, now municipalities and regions may determine salaries within a range of pay
tariffs in a pay grade and further they may negotiate with the employee ranked in the 13th
pay grade and above a contractual salary6.
It is worth noting that in central as well as local government the precise nature of the 10%
cut, i.e. whether to achieve this cut by cutting jobs or pay, has been left open i.e. for the
individual ministries to decide and manage. According to EPSU (2011b) it is likely that
ministries will implement this measure through a combination of the two. Nevertheless,
despite wage bill reductions, accompanied with changes to the system of remuneration as a
whole, a significant decline in local government employment is also evident.
Consequences for social dialogue
Overall, unions argue that there was no proper social dialogue around these reforms (EPSU
2011). In addition, for example EPSU (2012) highlight the negative impact on wages for
government employees (based on official earnings data) and conclude that they are now
around 5 per cent worse off in real terms than in 2009. Moreover, as can be seen in
appendix 9, the level of nominal wage increases agreed decreased on a continual basis
especially and most drastically which started off at a relatively high level of 16 percent in
1997 to a level of around about 2.5% in 2011.
6
CMKOS. Knowledge of the economic environment and knowledge from practice - the basis of successful
collective bargaining in public services and administration (in Czech). 5 July 2012.
<http://www.cmkos.cz/data/articles/down_3135.pdf>.
10
Nonetheless, in contrast to the unions, the government suggests that the proposed changes
had been subject to discussion and amendment. Before the adoption of the final version
that covered rules for determining salaries in municipal authorities several proposals were
considered and refined as described above.
Furthermore, these changes could be argued to have a potentially positive impact on
collective bargaining because it opens up more scope for collective bargaining in the area of
salaries, for example, regarding the remuneration system and rules for utilising tariff
margins. Up to 2011 collective bargaining was rather focused on non-guaranteed pay as well
as benefits financed by the social funds of municipal authorities.
Pension Reform
A very important measure relates to pension reform (OECD, 2011; IMF, 2012). An EC (2011:
21) report stated:
“Public finance in the Czech Republic suffer from chronic structural deficits, also even during
the growth period. The recent recession has thus emphasized the need for structural
reforms and internal consolidation even more. A reduction in structural deficits, along with
the reform of the healthcare system and pensions, is a necessary condition for ensuring the
long-term sustainability of public finances and thus the competitiveness of the Czech
Republic” (Source: Ministry of Finance:
http://ec.europa.eu/europe2020/pdf/nrp/nrp_czech_en.pdf; p.21)
Hence, it can be argued that the driver for pension reform as well as other related structural
reforms is not solely linked to the economic crisis (but due to its long term un-sustainability,
e.g. in the wake of an ageing population etc ) but has accelerated the need for it as well as
the speed with which it is being pursued – with substantial effects on public sector pensions.
Box 2: Key changes to Pension provision
2011 Pension Reform: Public Pillar, effective as of 30 Sept includes:
- increases in the retirement age which will continue to rise (...)
- greater link between pensions and contributions in the public pillar;
- stricter indexation rule: the former rule specified a lower limit for increases in pensions,
now the limit is binding;
- extension of the assessment period for the calculation of pensions;
- tightening of early retirement options.
2013 Pension Reform: Private Pillar has been approved. It will enter into force in 2013..
It envisages workers will be able to transfer 3 pps of their mandatory pension insurance
payments to private funds as of 2013, on the condition that they will add a further 2 pps of
contributions from their income. The transfer will be obligatory for people younger than 35
years. People above 35 will be able to join only by the end of the first half of 2013.
Furthermore, according to the 2010 reform, study periods are no longer credited and the
required insurance period will be increased from 25 to 35 years in 2019.
Source: EC (2012) WHITE PAPER - An Agenda for Adequate, Safe and Sustainable Pensions
According to the OECD (2011: 20) these significant modifications (Box 2) “go a long way
towards improving the sustainability of the public scheme, and strengthen the link between
11
benefits and contributions. In particular, the increase in the statutory retirement age
significantly improves the balance of the defined-benefit tier”.
Current developments: 2013- 2015 budget
Austerity measures proposed in April 2012 (to take effect 2013) include several measures on
the revenue side (mainly focusing on increasing income tax and VAT) and also several on the
expenditure side (Vláda Ceske Republiky, 2012; KPMG, 2012). The budget is still under
discussion; including further changes to the pension system, but the government has
survived several confidence votes, creating considerable political uncertainty (Oxford
Economics, 2012), although the bill on the Czech’s state budget for 2013 draft has been
approved by the Czech cabinet in September 2012 (CEZ, 2012b; Laca, 2012. More delays in
the full approval of the bill are likely and the government’s austerity plans may be modified.
Recently, the government has announced that a revised budget 2013 – 2014 will not be so
restricted on the expenditure side and some growth incentives are intended in favour of
research, education and investments in infrastructure. Austerity measures are searching in
expenditures in public administration (incl. to design and implement KPIs for measuring
effectiveness of back-office processes in civil service).
Other current developments:
Currently past approaches to the reform of public administration are reviewed, including a
draft of a single legal regulation of employment relations of civil servants and officials of
territorial self-governing units. The Government approved the legislative intent of a new act
on officials and employees of public administration. This act should replace the Act No.
218/2002 Coll. and the Act No. 312/2002 Coll. The Ministry of Interior in relation to the draft
prepared a proposal of thesis of the mentioned act, which the Government approved in
February 2012. An articulated version of the act should finish the Ministry by the end of
September 2012. The Ministry of Interior prepared the latest version in November and the
draft is criticised at least due to the reason that other interested stakeholders have a limited
time to comment.
Trade union responses
The most powerful body is the Czech-Moravian Confederation of Trade Unions (CMKOS)
which is a member of the Tripartite, i.e. the national tripartite Council of Economic and
Social Agreement (RHSD). It unites 307 trade unions, including the Trade Unions of State
Authorities and Organizations (OSSOO)8 and the Trade Union of the Health Service and
Social Care of the Czech Republic (OSZSP)9.
An assessment of the state of Czech trade unions in 2009 by Myant (2010) highlights both
negative and positive features - declining membership, coverage and activity levels in basic
organisations is evident while it must be acknowledged that trade union knowledge
improved in terms of how to get the best results from enterprise-level bargaining.
7
Trade unions members of the CMKOS. 23 June 2012. http://www.cmkos.cz/svazy.
http://statorg.cmkos.cz.
9
http://osz.cmkos.cz.
8
12
Moreover, trade unions have become capable of accommodating their requirements to the
economic situation and the employer’s prospects. It could be said that trade unions have
embarked on cultivating relationships with the employer. Such relationships may eliminate
confrontations and enable communication, discussion, partnership and participation at all
levels, driven by the effort to achieve the objectives.
Trade unions also concentrate on the application of legal mechanisms at sector and
enterprise level. At the same time collective bargaining strongly tends to become
decentralised and be held at the enterprise or even plant level. Thus labour, wages and
social terms collectively agreed are more closely adjusted to budgets and social partners are
able to respond flexibly to the market context.
Furthermore, there is actually an improved ability to exercise influence at the national level.
More specifically Myant (2010: 53) argues that the main confederation “has also visibly
learned how to wield influence, combining work through tripartite structures, lobbying and
protest actions”.
As Baccaro (2011: 363) notes, “The new member states of Central Eastern Europe have been
characterized by comparatively low levels of industrial action over the past decade. Yet, (...)
the Czech Republic (...) have seen generalized forms of 1-day protest action more usually
associated with Mediterranean Europe, aimed at the impact of public sector reforms and
Government austerity measures, respectively. While such developments do not signify a
wave of industrial unrest—indeed EU-wide figures for 2008 show that the incidence of
industrial action remains at historically low levels—they do indicate the potential of
organized labour to contest the imposition of particular effects of the crisis”.
One example would be a general strike in June 2008 organised by ČMKOS with 900,000
participants to protest against government proposals to cut social spending. Further
examples are provided below.
Table 3: Labour disputes in the Czech Republic - Examples
Specific Sector
Year
Comment (Reason/Outcome)
Demonstration organised by: Independent TU
of the Police Corps; supported by opposition
politicians + many other TU’s–incl. e.g. the
Czech-Moravian TU of Workers in Education
(ČMOS PŠ),the TU of Health Service & Social
Care (OSZSP), the TU of State Bodies and
Organisations (STATORG)
21 sep 2010:
approx. 45,000
attended
against planned pay cuts for public and state
employees including clerks, police officers and
firefighters/ plans to reduce funds allocated to civil
servants by 10% in 2011; joined by healthcare,
transport and school employees against
amendment of the Labour Code affecting pay and
rewards
all-day strike of public sector employees
(mainly public administration, schools, and
health and cultural institutions) organised by
the Czech-Moravian Confederation of Trade
Unions (ČMKOS)
involved some 148,000 strikers
” The first of a series of anti-reform
demonstrations, organised by ČMKOS.”
8 Dec 2010
in protest at government budget cuts, and was
supported by many more people. Protest meetings
were also held in Prague and other Czech regions.
There was widespread support from other trade
unions (national and international) and opposition
politicianshowever no changes/ results
against proposed govt reforms to the pension system,
healthcare, taxation + labour code” TU’s suspended
negotiations and left the tripartite meeting on 21 April
2011 because they said the government would not
accept their suggestions”
2011 (21 May)
13
Specific Sector
Year
Comment (Reason/Outcome)
Medical TUs new protest campaign follows on
from one in 2010 => would continue
industrial action in Feb 2012 if the promised
wage increases not implemented
Nov 2011
education workers´ union already on strike
alert 16 Mar negotiations with leaders
from the Independent Unions’ Association
(ASO) + from activist groups shall lead to joint
rally in April
March/April
2012: planned
demonstration &
strike
 demands= pay rises + secure funding for wages in
hospital sector concern that promises, made in Feb
2011 in memorandum agreed (as a result of industrial
action by hospital doctors threatening mass
resignation) regarding 2012 pay increases for all
hospital workers not be kept.
against planned austerity measures (including
measures such as a slower indexation of pensions and
dismissals of civil servants); 3
Protests: approx. 120,000 people attended
22 Apr 2012
due to ambitious fiscal tightening programme  PM =
Monday deadline to show support of at least 10 MP’s
Source: Labour Research, July 2010- Dec 2011; Collective Bargaining Newsletter, available at:
http://www.etui.org/E-Newsletters/Collective-bargaining-newsletter; Eurofound available at:
http://www.eurofound.europa.eu/eiro/
In health care, industrial action occurred relatively often (compared with other sectors).
Industrial action has been organised by the Trade Union of the Health and Social and Social
Care of the Czech Republic (OSZSP) in the period of 2008–2009. These actions usually take
one day only. In 2008 there were two strike threats (the employer stopped meeting
obligations under the concluded enterprise-level collective agreement, contrary to the policy
of the Ministry of Health, MZ ČR), one strike against the policy of the Ministry of Health and
two industrial actions against a merger of the Institute of Haematology and Blood
Transfusion (Ústav hematologie a krevní transfuze), Institute and the General University
Hospital in Prague (Všeobecná fakultní nemocnice v Praze) and against a merger of the
Traumatological Hospital in Brno (Úrazová nemocnice Brno) and the University Hospital Brno
(Fakultní nemocnice Brno). In 2009 there were two strike threats in social service facilities
regarding issues of social services (rewarding, lack of finance, allocation of subsidies, etc.)
and requesting wage improvements in the holding of regional hospitals – joint-stock
companies in the Hradec Kralove region.
Industrial relations in the health care sector10
Trends in the health care
Most of the health care facilities in the Czech Republic are private (approximately 98 %) 11.
The others (particularly hospitals and highly specialized medical institutions) are public
owned by the state, regional authorities or municipalities. The current health care system is
predominantly financed from general health insurance and is not financially sustainable in
the long run (while preserving the existing level of care for ageing population and an
increasing number of single-person households) and does not allow any radical changes in
working conditions of medical personnel.
Over the past twenty years the Czech health care system underwent radical changes which
were not always positively accepted by the public, trade unions as well as by professional
10
All the data about collective agreements, number of members etc. are available only on behalf of the trade
unions united in CMKOS, therefore the text focuses primarily on activities of OSZSP, which is at the same time
the largest trade union organizations uniting non-medical workers. (Veverkova, 2011)
11
Report on the state, development and perspective of healthcare in the Czech Republic, Prague: Project Round
Table for the future path of healthcare in the Czech Republic, May 2008, p. 17.
14
organizations (privatisation of health care facilities, a fee paid for a visit to the doctor etc.).
However, financing of the entire system which is based, on general health insurance only,
remains a substantial problem. This system at preserving the existing quality of healthcare is
not sustainable in the long run, but any attempt to reform the system has met with
unwillingness and up to now any minister of health has not got enough political support to
carry out any rather radical reforms. Any attempts of reforms are mostly rejected as nonprofessional, unsystematic, etc. Therefore, the health care system in the Czech Republic can
be characterised by constant efforts to make changes which encounter resistance and which
result in “cosmetic” modifications, not in important changes to the system. It is also linked
with rewarding and working conditions of medical personnel, both being limited by financial
restraints of funds from general health insurance and being a subject of frequent protests.
The situation in the health care sector has been generally perceived as critical, since the
occupation of nurses and paramedical staff is considered unattractive (intensity of labour,
necessity of university education at the bachelor’s level at least, obligatory life-long learning
often paid by employees themselves and poor pay and working conditions. By and large, the
situation in the health care sector has been continuously a subject of public debates,
however, so far no government has found enough political support to make radical changes
in the health care sector. In order to make the occupation of medical and paramedical staff
more attractive it would require an increase in budgets of health care establishments, which
is not allowed by the current system of the general health insurance. It can be said that
despite all the efforts by politicians, trade unions and other stakeholders the situation in the
health care sector remains unresolved. Also, further privatisation of hospitals and ward
facilities has been a subject of discussions among politicians for a long time and are ongoing.
Social partners and collective bargaining
In the health care sector trade unions operate particularly in big health care facilities
(hospitals, regardless of ownership) rather than private physicians with their own practice.
OSZSP (The Trade Union of the Health Service and Social Care of the Czech Republic) does
not cooperate with the smaller trade union, POUZPČMS (Professional and Trade Union of
Medical Workers of Bohemia, Moravia and Silesia) (See Annex 2), because – according to
their criteria – it is largely ineffective.
Several employer organisations operate in the sector, nevertheless, their aim is to defend
interests of their members especially at the level of government and other institutions
involved or pursue other aims (they carry out education, expert activities, they represent
their members externally, etc.). None of these organizations participate in collective
bargaining.
Thus, collective agreements in the health care sector are concluded only on enterprise-level.
Higher-level collective agreements cannot be concluded because a contractual partner –
employer organisation – is missing with whom it would be possible to negotiate. A practice
of extending multi-employer agreements to employers who are not affiliated to the
signatory employer associations does not exist so there are no multi-employer agreements
in the sector.
15
The coverage rate of collective bargaining in terms of enterprises is not available. The
coverage in terms of employees is estimated to be 74 % (Veverkova, 2011). This is a rough
estimation calculated on the basis of data provided by OSZSP ČR on the number of
employees covered by enterprise-level collective agreements. However, the data include
also other healthcare (medical) workers (e.g. doctors).
Enterprise-level collective agreements are not publicly available as social partners have no
obligation to publish them. Generally speaking, in the health care contributions of single
employer collective bargaining are difficult to generalize, since there are differences
between public and private health care sectors, large health care facilities and a number of
small private physicians. Based on common bargaining practice in the Czech economy we
can deduce that most of the enterprise-level collective agreements deal with regulation of
working hours, payment for extra work, enterprise social care (in particular providing
benefits like luncheon vouchers, pension insurance, life insurance etc.) and bonuses.
Views of the social partners on changes in the health care
The situation in the health sector has been a frequent subject of protests by medical
personnel, in particular these protests concern wage developments which is generally
regarded as inadequate with regard to education, job content and working hours of medical
personnel in the Czech Republic. In recent years, a forum for social dialogue dealing with
matters of the health care sector represents a form of tripartite dialogue. The situation in
the health care sector is presented relatively frequently at tripartite meetings at the national
level (Council of economic and social agreement of the Czech republic (Rada hospodářské a
sociální dohody, RHSD), where OSZSP participates via its membership in Czech-Moravian
Confederation of Trade Unions, with the subject-matter of discussions (and disputes) often
being the reform of the health care system, the system of health care financing, etc. It is only
indirectly covering working conditions and wage developments in the health care sector.
OSZSP put effort into creating platforms for social dialogue at the regional level as well as at
the sector level, however, these activities have had no real impact on the situation in health
care and are not important in comparison with tripartite meetings and collective bargaining
on enterprise-level.
Current situation in the Civil Service
For many years, the long term reform of public administration in the Czech Republic has
been criticised for an absence of a specific legislation/ regulation regarding the status of
employees in the public administration and an under-developed human resource
management system. A more systematic regulation of a public servant status brought two
laws:
1. Act No. 218/2002, on the service of civil servants in administrative offices and
remuneration of these employees in administrative offices (civil service law) [Act No.
218/2002, on Civil Service]. Civil service is the specification of state employees and is a part
of public service. Individual labour relations of civil servants are governed by the above
mentioned Act and their working and wage conditions are regulated by the Labour Code.
The state authority in this Act means the place where an employee performs the civil
service. This Act has been amended several times and it is still not clear whether and when
to come into full effect. Based on discussions in the media, currently it seems that it will
never come into force.
16
Consequences of austerity measures
Following the government-imposed reduction in individual budgets in the civil service/
central government ministries, several ministries have implemented pay cuts and also have
reduced employment. For example, at the Ministry of Environment (MoE) there will be
layoffs (due to the abolishment of some positions) and furthermore, from next year (2013),
the ministry will also target pay and implement a reduction in salaries. Other ministries
particularly pursued layoffs as well as reduction in wages last year; therefore most seek no
such further changes (Týden, 2012).
Ministry of Foreign Affairs laid off 333 employees in 2011 but is not planning further
significant reductions in employment although it is possible that some people will leave the
office the following year. There will be no employment reductions in Education as there has
been a reduction in pay by 10 per cent. The Justice Department also expects to cut pay by 10
per cent in 2013.
According to a statement from the Interior Ministry in 2013, there will a reduction in the
funds for pay by a maximum of one percent, because the Authority reduced the budget for
pay already in 2011 by 11 percent, and this year (2012) by a further five percent.
budget of the Ministry for Regional Development the same reduction in pay is planned for
next year. Due to the abolishment of the Territorial Development Institute, 18 employees
will be made redundant. Further deeper systemic organisational changes are however
planned.
The Ministry of Defence has not yet decided on the issue of salaries for 2013. Currently a
new organisational structure is being planned with regards to the MoD and the Czech Army,
which should be presented to the government in the coming months.
Ministry of Finance implemented a ten percent reduction in pay in 2011 and, in addition,
911 positions were removed and employees laid off. The current plans include further pay
cuts.
The Ministry of Culture expects the budget for salaries to remain stable, i.e. the same as this
year, and does not want to make changes to its employees’ pay. Changes will only be related
to an individual staff appraisal.
3. a Local Government
Background: local government reform
As a post-communist country, an important issue in the Czech Republic is the transition from
a totalitarian regime with central planning to a decentralised (and democratic) public sector
and a devolution in power and financial control, in particular in relation to local governments
(BBC, 1997; Bryson and Corina, 2004; Vidlakova, 2006). The transformation also included the
transfer of state-held resources to private businesses and privatisation.
Reforms commenced in November 1989, shortly after the velvet revolution. Although the
structure of government and the central state administration have changed several times,
the main focus during the 1990s has been on local government. However, in terms of
17
decentralisation with respect to local government, Bryson and Corina (2004) point out that
progress since 1990, has been slow and argue that local governments do not have genuine
autonomy as municipal finance is still largely determined from the centre and is generally
insufficient. Because such a large share of Czech municipal funding comes from the state,
Czech municipalities enjoy limited budget autonomy. Likewise, the salaries of local
government employees are controlled by central government.
Another related issue is the fact that municipalities in the Czech Republic are very small as
many of them were seeking independence in a very short period of time after the advent of
the Velvet revolution. According to Illner (2008) the motives behind these separations were:
Undoing earlier forced amalgamations and regaining administrative autonomy, with an
expectation of economic gain from independence.
A desire to escape discrimination from other villages that they had amalgamated with.
Locally specific personal tensions and traditional antipathies between neighbouring villages.
The small size of municipalities discourages fiscal autonomy and effective self-government
due to the lack of resources and managerial capabilities. For this reason, municipalities can
join in strategic alliances and join up certain services, a practice which is being endorsed by
central government. Inter-municipal cooperation is widespread in the Czech Republic (i.e. .
70% of municipalities as of 2005) (Illner, 2008; Sedmihradska, 2011).
An important development of organisational change in the public sector has been the
elimination of districts and the establishment of regional government that has moved
decision making down from the centre for schools and hospitals. Moreover, many of the
functions previously performed by district councils have been transferred to the regions and
a new type of municipalities, i.e. those with extended responsibility (type 3) which carry out
functions related to state administration, for which the state retains responsibility, in
addition to their usual functions. However, at the same time, there are indications that
future reform, possibly in 2014, may transfer functions to the central state and thereby
shrink local authorities’ competencies (Chatrie, 2012). Although delegation to the regions
has been viewed positively, politicians in regional governments complain that while their
responsibilities have increased (in relation to roads, hospitals, schools, old-age homes),
central government decides upon the budget and they identify a shortfall of funds from the
centre, both to municipalities and regions, to keep pace with these developments (Druker,
2012). Druker (2012: 192) identifies that this failure “has proven particularly vexing for
officials of smaller towns, which receive far less money per capita than big cities”.
Box 3
Local government financing
According to the OECD (2011) just over a quarter of general government expenditure is
spent at the sub-central levels in the Czech Republic (OECD 2011: 55).
Local government overall derives its income from two main source: 1. tax revenues (from tax
sharing arrangement and assigned own taxes) and 2. various forms of transfers from the
state budget (transfers, grants and subsidies). According to OECD (2011) the former source
of finance i.e. tax revenues “are at the full discretion of subcentral governments” while the
latter (“transfers and grants that cover education spending, together with subsidies for
18
selected health providers and for the provision of some public administration services”) are
fully earmarked.
Municipalities currently derive one third of their income from earmarked transfers and two
third from tax revenues and other sources while “For regional administrations the ratio of
earmarked transfers and shared tax revenues is inverse” (p.55).
As mentioned above, there is not much incentive for small municipalities to merge as this
would not result in an increase in the shared tax revenue that much due to the fact that the
municipalities in question would fall into a bigger population category– according to OECD
(2011), there is a modest bias in favour of the very smallest municipalities and six cities
above 100,000 inhabitants including the capital of Prague in the redistribution of shared tax
revenues , which is based on centrally determined coefficients that have been set for various
municipal sizes, primarily based on historical revenues and population, as well as on, albeit
to a smaller degree, municipal surface area.
Authorities have been discussing a revision of the revenue sharing scheme in 2011 and 2012
and changes are likely/aim to imply a slight flattening in the distribution of shared revenues,
mainly by withdrawing disproportionately higher revenues in favour of the middle-sized
ones.
Source: OECD (2011)
Local government - social dialogue
As mentioned above there is no sectoral collective bargaining as there is no local
government employers’ organisation with a mandate to negotiate in local government as in
the whole of the public sector and wages are set at national level. There is some collective
bargaining on individual municipal/ regional level, mostly in terms of certain nonpay
conditions.
As Štěpánka,P. (2013)suggests, the percentage of collective agreements including provisions
on negotiated, so-called ‘social funds’ within municipal and regional administrative bodies
has remained stable at an average level of 92.4% since 1996 while however the number of
collective agreements lay down the right of trade union to take part in the decision-making
processes for the use of these funds has been decreasing. While the use of the social funds
varies – it is being suggested that generally, meaning both the private and the public sector,
a quarter of the fund goes towards the costs of employee/in-company meals, while the
public sector spends a larger proportion on this. Other than that these funds are often being
used for employee recreation, i.e. to provide loans to cover housing albeit decreasing.
Specifically the public sector now tends to replace housing contributions with
supplementary pension scheme contributions.
Self-governing territorial units have more possibilities to negotiate wage conditions since
2011, particularly in the area of variable pay. Public administration has some limits in the
subject of collective bargaining stemming from the Act of self-governing territorial units and
centrally determined wage regulations.
Trade unions in the local government sector include:
- The Trade Union of State Bodies and Institutions (TUSBI)
19
- The TUHSSC (health and social services –regional authorities)
- TUFF (firefighters)
- CMTUCEA (civilian employees and in the army)
- TUCNP TUWCPE (workers in culture and natural protection of the environment)
Despite the weak framework for dialogue, in early March 2012 for example representatives
from government and representatives of the Union of Towns and Municipalities agreed on
common priorities at a joint meeting. These were mainly around the issues of budgetary
allocation of taxes, regional education, drawing from European sources and changes in
public administration (Eliáš, 2012).
The tax-sharing formula has often been the subject of discussions and has been subject to
frequent and recent changes and there are debates in the way municipalities are differently
impacted depending on size and the limited tax autonomy of local government
(Kameníčková, 2012b; OECD, 2011). The OECD (2011) suggests that “To make sub-central
governments more accountable to their electorates, they should be assigned greater tax
autonomy ...to balance this out and to further strengthen the fiscal responsibility of subcentral governments, the authorities should introduce an “internal stability pact” that sets
borrowing limits on local budgets and ensures that the local fiscal policy is in line with the
overall national goals” (OECD, 2011: 19). Hence, there are ongoing pressures to reform local
government and its financing. The economic crisis reinforces these pressures on
municipalities but it is not the sole cause of fiscal restrictions.
Nonetheless, as central government imposes fiscal restrictions, disputes over the allocation
of funds are increasing reinforced by the political division between the government
established in 2010 and the regional governments, which since 2008 are mostly in the hands
of the Czech Social Democratic Party (CSSD) (BTI, 2012). Another example would be a case in
2011 where regional governors have sued central government for not fulfilling its promise to
finance regional transportation (Druker, 2012).
Fiscal restrictions
Annual change of revenue and expenditure of municipal authorities
Financial restrictions began to have a significant effect on municipalities from 2011.
According to Noviny.cz (2012) in 2011, municipalities experienced a record drop in total
revenues due to a cut in subsidies and this required a cut in spending. This means a surplus
(of 0.8 billion CZK/ 31 million EUR) overall. The graph below illustrates the fact that for the
first time, revenue as well as expenditure fell in 2011 due to the decline in subsidies of CZK
16.1 billion (639 million EUR)and to a lesser extent, a decline of capital income of 4.7 billion
CZK (circa 186 million EUR) (Kameníčková, 2012a). Total revenue for the regions has also
declined from 2011.
20
Figure 1: Annual change of revenue and expenditure of municipal authorities
Revenue
Expenditure
Source: Kameníčková (2012a) Špatný rok 2011, available at: http://denik.obce.cz/clanek.asp?id=6555393
Annual change in income items in the budgets of municipalities (excluding Prague)
Municipalities derive a substantial amount of their income from tax revenues but the system
has been subject to frequent changes (Kamenickova, 2012b). Overall, there has been a drop
in tax revenues, even though only about 1 billion CZK (approximately 40 million EUR).
income from the sale of municipal property (capital income) only constitutes a small
proportion of the total municipal revenues. The decisive factor concerns the annual
fluctuation with regards to subsidies, including national level subsidies as well as subsidies
from European funds. A key concern is that EU funds will continue to decline in the light of
the economic crisis (Jedlicka, 2012). Since 2004 European Union structural funds have been
an important source of finance for cities and municipalities in the Czech Republic. Prague is
excluded from these figures because it differs significantly from municipalities in terms of
responsibilities as well as factors such as size and population.
Figure 2: Annual change in income items in the budgets of municipalities (excluding
Prague)
Income from tax
Income (excl. from tax revenues)
Capital income
Subsidies
Source: UFIS, Ministry of Finance calculations CCB - Czech Credit Bureau, taken from Kamenickova (2012b)
While, overall there has been a decrease in revenues for municipalities (excluding Prague) of
5% (10 billion CZK/ 397 EUR) municipalities have also reduced their expenditure, which leads
to an overall surplus in the municipalities budget. This indicates that on the whole,
municipalities manage their budgets reasonably well, even in tough times.
Tax revenue and grants
21
The two items – tax revenue and grants – constitute more than 80% of total municipal
revenue, the amount of which is decided by government.
Figure 3: Annual change in tax revenues of municipalities (excluding Prague)
1 – 199
200 – 499
500 – 999
1000 – 4999
Over 5000
Source: UFIS, Ministry of Finance calculations CCB - Czech Credit Bureau, taken from Kamenickova (2012b)
Only 2011 was marked by the same growth rate of tax revenues (mostly moving around
zero) for all categories of municipalities.
Figure 4: Annual change: grants to municipalities (excluding Prague)
1 – 199
200 – 499
500 – 999
1000 – 4999
Over 5000
Source: UFIS, Ministry of Finance calculations CCB - Czech Credit Bureau, taken from Kamenickova (2012b)
With regards to subsidies (Figure 4) the most pronounced development has taken place in
the category of the smallest municipalities although the other categories show similar
dynamics in that subsidies generally increased up to 2010 but significantly decreased
thereafter.
Income growth rates of municipalities
The highest average annual growth rate in the period 2008 – 2011 is evident in the smallest
category of municipalities (population size: up to 199 people). Conversely, the lowest
average dynamics are in the largest category of municipalities (with population over 5000),
at 1.1%. In the period from 2008 – 2011, the average annual growth of total revenue
decreased with increasing size category of municipalities (Table 4 below). This can be linked
back to the fact that the system of sharing tax revenue has been previously in favour of the
smallest municipalities and the amendment in the system has reduced these differences.
Therefore, while in the smallest category the annual decreases are more substantial, there is
still an average larger growth in the period between 2008 and 2011.
22
Table 4 Total income - Annual change (%)
Category municipalities
2008 2009 2010 2011 The average rate
1-199
30.7 11.4
5.9
-7.2
10.2
200-499
15.8
-1.4 11.6
-3.0
5.7
500-999
10.0
-1.4 13.4
-3.9
4.5
1000-4999
6.0
0.7 13.2
-6.2
3.4
above 5000
6.4
-4.4
7.2
-4.6
1.1
Municipalities without Prague
7.4
-2.8
9.0
-4.8
2.2
Source: UFIS, Ministry of Finance calculations CCB - Czech Credit Bureau, taken from Kamenickova (2012b)
It is worth mentioning at this point that the category of the smallest municipalities
encompasses nearly one quarter of all municipalities, while only 2% of the whole population
live in these municipalities, although the population size has been recently increasing.
Growth rate of expenditure of municipalities
Again considering the expenditures of municipalities (excluding Prague) there are great
differences with regards to the category of municipality. The smallest municipal category
differs from the rest in that they had experienced the highest growth in spending up to 2010
although gradually decreasing but then significantly dropped after 2010 below the levels of
the other categories.
Debt
Yet, municipal debt between 2008 and 2011 increased by 19% per year in the category of
smallest municipalities. In the last 2 years they have decreased in this category, however this
does not compensate for the large growth in 2008 and 2009. For all municipalities overall,
debt has increased by only about 2 per cent and the largest municipalities had an increase of
debt of less than 3 per cent. Although it is important to mention that the debt levels of the
smallest municipalities can not threaten the financial stability of public finances, it may be
associated with risks for the municipalities in question (Kamenickova, 2012b).
Consequences of fiscal restrictions
When focusing on central and local government employment levels since 2008 (see Figure
5), the following chart illustrates important developments: Firstly, overall, in the period
between 2008 and 2012 local government employment decreased (-7.4%), especially again
since 2010/11 while the overall trend in central government employment is more stable.
Hence overall it can be suggested that austerity measures implemented since 2011 have had
an impact on employment levels, especially in local government. The decrease in local
government stems from the termination of part-time jobs, which is prevalent in local
governmnet, and the non-renewal of fixed-term contracts.
With regards to gross monthly wages the trend is slightly reversed in that within local
government average gross monthly wages/ salaries have increased after stagnating until
2009. On the other hand, the trend in central government is more negative, although not as
consistently (see appendix 4).
23
On the other hand, appendix 4 suggests that wages and salaries including as well as
excluding other personnel expenses in local government have been decreasing since 2011.
There has been an overall decline in central government as well, although after a sharp
decline in 2010-2011 these levels have picked up again towards similar levels as prior to the
decline.
Figure 5: Central and local government employment levels
Based on the employment and wage statistics it can be suggested that the 10% cut in the
public sector paybill has had a different impact in central versus local government in that
ministries within central government have implemented this cut rather by reducing pay than
employment while within local government the overall impact seems to be greater and both
expenses in relation to wages and salaries have decreased as well as employment levels.
Also in the non-business sphere as a whole the nominal as well as real wages have
decreased since 2010 (see appendix).
This is in line with the fact that: Wage conditions bargained in collective agreements by OS
SOO during the years 2008-2011 documented a decreasing trend of liabilities - annual wage
increases gradually declined from year to year. In 2008 the wage increases were agreed in 20
collective agreements and in 2011 it was only one case of this commitment. This
phenomenon is caused by implementing government measures that limited budgets on
salaries. For further information on collective agreements in public administration please see
appendix 6.
Differential impact of fiscal restrictions
Municipalities are differently impacted due to differences in revenues, partly also as a result
of changes with regards to the tax sharing system. The recession itself is felt by
municipalities as is shown by the case studies below. Below two case studies are discussed
which differ in terms of population but both fall into the biggest municipal size category.
Moreover, a survey has been conducted in order to collect additional data on the role of
trade unions within municipalities. As there are a large number of municipalities in the Czech
Republic, this contributes to a more representative picture of current developments.
24
3.b Case studies
Background Information:
Table 5: Population of municipalities of the Czech republic, 1 January 2012
Municipality
Brno (Jihomoravský region)
Vsetín (Zlínský region)
Total
378,965
66,901
Population
Males
182,733
32,927
Females
196,232
33,974
Total
42.2
41.0
Average age
Males Females
40.4
43.9
39.2
42.6
Source: Czech Statistical Office, available at http://www.czso.cz/csu/2012edicniplan.nsf/engp/1301-12
Vsetín
According to Vsetín City Council, the economic crisis is an important factor which influences
the authority’s strategy and the need to implement austerity measures which shall ensure a
more efficient and effective operation of the municipality (Mesto Vsetin, 2012). In order to
generate savings the authority both, reduced labour cost as well as the number of
employees.
Employment reductions
As of January 2012 the authority was talking about reducing the workforce by 14 employees
but recognises that this is by far not all. Similarly to Brno (see above) in 2011 eleven Job
centre (Department of Social Affairs, the Bureau of Labour) employees had been made
redundant and three more are expected to lose their jobs in this area- the underlying reason
relates to legislative changes related to the payment of social benefits. Given the fact that
Vsetin plans further employment reductions, this can potentially be a large number in
employment reduction in proportional terms, given the municipality’s small population size.
Reduction in wages
The budget for the year 2012 which had been agreed by councillors in December 2011
included the reduction of wages in 2012 by 6 per cent, which shall contribute to a saving of
3,054,000 CZK (121,239.89 EUR). This had already been indicated in the draft budget for
2012. The mayor Iveta Tabor explained that the choice between job losses versus wage cuts
is inevitable.
Productivity
Furthermore, the authority looks specifically at the issue of labour productivity and for this
purpose put out a tender for the position of a ‘Work Quality and HRM Manager’ whose task
it will be to examine the various departments of the municipality and of each individual
worker in terms of its efficiency and productivity.
More specifically, according to Municipal/ Office Secretary Radomir Zimek, the specialist/
expert shall identify a so-called ‘working day’ and measure the degree of productivity, as is
also done in the private sector- both for departments as well as individual daily routines. In
the case that the findings indicate under-productivity, the authority will further reduce the
number of workers. In the near future, further steps will be taken aimed at simplifying the
25
organizational structure of the municipality by combining/ merging some departments with
similar job descriptions.
Organisational Change
The whole organisational structure is being looked at and the authority is likely to undergo
re-organisation. The asset management centre which had previously been fragmented has
been merged. Instead, a newly formed department will be integrated into the structure
which will focus on property management and investment – more specifically, it shall
monitor the implementation of investment projects and look at property of the city with the
aim of increasing its income from rent.
These changes are said (According to Secretary Zimek) to be particularly important in order
to offset the changes and the corresponding fall in tax revenues.
Further reorganisation plans relate to the allocation of the investment department and its
connection with the Department's strategic development of the city.
Another planned re-organisation relates to the management information center and
strengthening the investment’s department connection with the Department’s strategic
development of the city.
Brno
In 2011 the manager of Brno city/municipality won the award of ‘manager of the year
2011‘within the category of public administration. In an interview (Urbánková, 2012), the
manager argues that despite the economic crisis, Brno, which is a municipality with
extended powers, was able to maintain a balanced budget.
In fact, in 2011 Brno has had a surplus of 200 million CZK (8 million EUR). However, for the
year 2012 it is expected that expenditure will outweigh revenues. In the case of Brno,
resources from the previous year will be used to fill the gaps in the budget and mitigate this
decline (including through cash from city funds and a loan from the European Investment
Bank).
The biggest risks facing Brno, according to the manager, relates to the general economy/
recession and its negative impact on revenues from shared taxes and changes to the budget
tax system/ the law on budgetary allocation of taxes which will lead to an expected shortfall
of 250 million CZK. It is being stated that the long-term strategy is being revised as the same
broad strategy has been in place (only being updated) for around 10 years.
Furthermore, in relation to job losses, it is being stated that no significant number of job
losses are being expected in 2012. However, there has been a decrease in employment
because the job centre function has been transferred from one part of Brno to another part
of Brno, whereby a reduction of 16 posts has occurred. This relates to the shift of the social
benefits administration to a network of newly centralised Labour Offices, taking advantage
of economies of scale (OECD, 2011). A further 6 posts have been lost due to the fact that EU
projects have expired. No further reductions in posts are planned.
26
Survey: Reactions of the social partners - Trade unions and employees’ satisfaction in
municipal authorities12
Trade unions and collective bargaining in municipal authorities may influence the impact of
austerity measures in the area of public employment and compensation. To identify how far
trade unions are accepted as representatives of employees in local and regional public
administration and how employees of territorial self-governing units are satisfied with
working, social and wage conditions, a questionnaire survey was conducted. The survey also
includes trade unionism in municipal authorities with very limited other public data
available.
The research involved a questionnaire survey among employees in municipal authorities in
July 2012. The questionnaire covered 26 closed questions (using Likert scales) and 4 open
questions. Questions were divided into the following thematic groups:
 Period of employment and job position in municipal authorities (questions 1 - 2)
 Respondent attitudes to trade unions (questions No. 3 - 5)
 Assessment of employee satisfaction (questions No. 6 - 26)
 Compensation (questions No. 6 - 12)
 Training and development (questions No. 13 - 14)
 Job description and work organization (questions No. 15 - 18)
 Labour relations (questions No. 19 - 23)
 Motivation and job satisfaction (questions No. 24 - 27)
 Demographic data.
Questionnaires were sent to addresses from a contact database of authorities of Czech cities
and municipalities, which was further supplemented by contacts of regional authorities. The
questionnaire was distributed to all authorities on 4th July 2012. It included a total of 4,250
municipal authorities, from which returned 512 questionnaires (12 % of the total) and valid
questionnaires were 498 (11.7 %).
The demographic and professional structure of respondents corresponds to a typical
employee profile in Czech municipalities, which provides a realistic picture of current
employment, and the survey can be accepted as representative.
In the survey participated 389 women out of the total number of 498 respondents, i.e. 78.1
%, and 107 men (21.5 %). The largest representation in terms of age is the group aged 36 45 years (34.3 %) and then officials aged 46 - 55 years (29.7 %). Most respondents have
secondary school education (56.8 %) followed by university graduates (39.6 %). Respondents
who hold an office worker position are 345 (69.3 %), a head officer position - 86 (17.3%) and
are chiefs of a self-governing unit - 67 (13.5 %). Response rate of valid questionnaires was
the largest in case of municipalities with basic type of activities – municipalities of the I. type
(48.6 %), followed by the municipalities with extended powers – municipalities of the III.
type (30.5 %). Municipalities with an authorized municipal office (municipalities of the II.
type) were 10.6 % and regional offices - 10.2 %. Length of employment with municipalities
12
The questionnaire research is a part of the master`s thesis worked by Odvarkova, Marketa. Social dialogue in
municipal authorities in the CR (in Czech). Prague : University of Economics, 2012, p. 47-63.
27
mostly varied in the range of 10 to 20 years (31.5 % of respondents), 26.7 % are employed 5
– 10 years and officials with less than 5 years of municipal experience featured almost the
same proportion - 26.5 %. Respondents with more than 20 years experience in office were
15.3 %.
Low union density exists in a number of sectors and businesses in the Czech Republic. This
stems from the generally very different and often negative public perception of trade
unions. This is linked to weak traditions and experience of collective bargaining and the fact
that democracy is still relatively new in the Czech Republic and therefore citizens doubt their
ability to influence even municipal level decisions.
The questionnaire survey offers a realistic picture of a current trade unions position in
municipal authorities, employee attitudes to unions and the role of social dialogue. The
findings document the following - 72.5 % of respondents say that trade unions do not have
any organization in their municipal authorities and only 6 % of respondents are TU members.
A rather negative stance is confirmed by answers on a question regarding satisfaction with
TU representatives at municipal authorities. The question is just answered by officials on
whose workplace trade unions operate. The main finding here is a relatively high number of
respondents who do not know whether they are satisfied with activities of trade unions or
not, but the remaining group of officials organized in trade unions have positive opinions
that are almost twice higher than those with negative ones. So it seems as a necessity for
future expansion of trade unions to gain people`s trust (Odvárková, 2012: 54).
The questionnaire results do not indicate that trade unions in municipal authorities have a
positive influence on employee job satisfaction. Job satisfaction of officials who work in
municipal authorities with no trade unions is very similar with job satisfaction of those
employing with authorities where trade unions bargain. It can be even observed that
officials employed by authorities with the absence of trade unions are slightly more satisfied
with compensation and working conditions than officials in municipal authorities with
unions. But this may not be surprising in the sense that trade unions operate to surface
dissatisfaction amongst workers and by providing voice deal with these grievances. This
difference is small and the cause is difficult to establish. Survey findings also give valuable
information about employee attitudes to trade unions. Most respondents hold a negative
view of TU activities at the workplace. This phenomenon is probably determined by a longterm public view on trade unions as a ineffective institutions or by a misunderstanding of
their roles in society. This situation is influenced by other factors as well, e.g. how senior
union representatives present their policies and actions in the media, which evoke
reminiscences of the communist past, and social dialogue at nation-wide and sector level is
limited, undermining scope to produce beneficial results.
An analysis of ongoing reforms of public administration shows that legislative measures and
Government proposals tend towards liberalization and implementation of policies and
practices used in the private sector. This is reflected in approvals of laws that support
application of salary ranges based on personal merit, negotiation of incentive pays and
contractual salaries in public administration. Municipal authorities gradually gain greater
opportunities to determine employment and working conditions. In circumstances of budget
cuts trade unions can play their roles (information, consultation, bargaining), however,
28
employees see their activities as ineffective in determining working, social and wage
conditions and have a strong tendency not to join trade unions.
Impact on service quality
It is worth noting that there are no national indicators available about the cost and quality of
public service provision across municipalities and regions (OECD, 2011), which is not
beneficial with regards to ensuring efficiency and effectiveness of sub-central service
delivery as no proper assessment of the municipal performance is undertaken. However,
some municipalities in the Czech Republic, on their own initiative, have begun to benchmark
their costs.
As mentioned above, due to the large amount of extremely small municipalities (average
size: 1,600 inhabitants) in the Czech Republic, efficient provision of public services seems
challenging. With a population of 10 million, the country has two sub-central levels with
directly elected officials – 14 regions and 6 245 municipalities.
4. Discussion and conclusion
In the era of the global financial crisis the Czech public administration and services are under
severe pressure to make cuts. Social partners in municipal authorities and the health care
sector can negotiate working, pay and social conditions but heavily circumscribed by legal
regulation, especially the Labour Code. In reality, social dialogue is very under-developed at
national (tripartite) as well as at sectoral levels in public administration. It continues only at
the organizational level, but collective agreements are not capable of limiting pay cuts.
Austerity measures implemented by the Government are normally imposed rather than
agreed with the unions and the mechanisms used to cut pay have almost always been
decided on centrally. Cuts seem to be the first round of cuts as it is judged to be insufficient
and it is predicted that pay will be reduced in coming years
However, the cuts in public administration are not solely linked to austerity but are linked to
longer term reforms of the pay system, as amended in the Labour Code. In relation to this,
the main issues relate to the elimination or reduction of variable pay, benefits and other
indirect personnel costs as well as attempts to increase wage gaps between the higher paid
and the lower paid due to the reforms of the pay system, although the budgets are cut.
In conclusion, this report attempts to answer the following three questions, namely;
1. What changes have there been in terms of job levels, terms and conditions of
employment and patterns of work organisation?
2. How have these changes been implemented and to what extent has social dialogue
contributed to the change process at national and sectoral level?
3. How have institutions of social dialogue influenced industrial relations processes/
outcomes in the public services?
The public sector as a whole as well as the structure of local government underwent
significant changes since the 1990s and the Czech Republic is still a country in transition. As
such, there is a weak tradition of social dialogue and collective bargaining with the public
29
sector characterised by a sovereign employer tradition. The law largely regulates relations
between the social partners and also establishes pay and other key terms and conditions for
the public sector workforce.
Nevertheless, formally there are national level social dialogue institutions which offer a
platform for policy discussions but it is underdeveloped. This has continued to be the case,
and in the face of the economic crisis social partners had no meaningful influence nationally
on austerity measures.
The current government which had declared itself the ‘government of budgetary
responsibility’ (BTI, 2012: 19) has used the crisis to implement significant measures,
specifically related to austerity, such as a wage freeze, changes in public sector pensions as
well as cuts in budgets which in turn also affects employment levels. Changes in job levels
are particularly large in local government. The impact on wages has been negative for both
central and local government employees.
At a sectoral level, there has been no social dialogue due to the fact that no employer
organisation exists which has been a long-standing problem with regards to collective
bargaining.
However, other terms and conditions are negotiable at the organisational level. Due to the
weak role of trade unions, this can only be estimated to be the case in 20 – 30 percent of
cases in the local government sector. This estimate is based on reading across from similar
trends that occurred in the business sector in the 1990s and needs to be treated with
caution.
An important point is that not all measures introduced are solely related to austerity but
austerity has increased the need for them and the speed of implementation, such as
changes relating to pay reform. In this connection, it has to be acknowledged that
government proposals have been frequently changed prior to implementation which shows
some, albeit a low degree, of social dialogue. In addition to that, for example the joint
meeting held in March 2012 between government representatives and representatives of
the Union of Towns and Municipalities illustrates there are other opportunities to discuss
and even agree upon common priorities.
However, some of the current changes affecting local government are affecting
municipalities in different ways such as the structural changes to the system of tax
redistribution. In both Brno and Vsetin this has been mentioned as an important factor
influencing the municipalities’ strategy.
Municipalities, such as Brno, are also affected by the recession and state of economy as a
whole but mainly by the reduction of subsidies from national level as well as from the EU
However, while Brno, the larger municipality, is financially still doing well it had unlike Vsetin
not to implement any measures in response to austerity. Although also belonging to the
largest municipal size category, Vsetin had to respond much more drastically with
organisational restructures/ patterns of work organisation, redundancies and wage cuts.
There is no indication that there has been extended dialogue on this issue prior to the
approval of these measures.
30
In sum, the institutional architecture of social dialogue has not changed much since the
advent of the crisis and remains very underdeveloped in terms of both quantity and quality.
The industrial relations climate remains difficult and trade union influence has been low
prior to and after the crisis. The main issue in the Czech public sector concerns structural
issues and pressures which have resulted in deep public expenditure cuts. These have
differential impacts on central versus local government as well as regional versus municipal
government and also within these categories. Further cuts are expected.
Acknowledgement
I want to sincerely thank all those who contributed to its processing. Their knowledge and
experience enabled me to understand long-term problems of social dialogue in public
administration in the Czech Republic. Thanks are given to participants in the nation-wide
workshop, which was held on 13 June 2012, participants in individual interviews made
during July, August and October 2012, Ms. Marketa Odvarkova who conducted a
questionnaire survey among officials of municipal authorities of the CR as well as the
number of anonymous respondents involved in the mentioned survey.
References:
Baccaro, L. (2010) Discussion Forum I - Labour and the global financial crisis, Socio-Economic
Review, 8, 341–376
Baccaro, L. and Heeb, S. (2011) Social dialogue during the financial and economic crisis:
Results from the ILO/World Bank Inventory using a Boolean analysis on 44 countries,
Employment Sector - Employment Working Paper No. 102
BBC (1997). World: Analysis – The Velvet Revolution. Available at
http://news.bbc.co.uk/1/hi/world/analysis/31580.stm
Bertelsmann Stiftung’s Transformation Index (BTI) 2012. BTI 2012 - Czech Republic Country
Report. Gutersloh: Bertelsmann Stiftung 2012
Bryson, P. and Corina, G. (2004). Public Sector Transition in Post-communist Economies: The
Struggle for Fiscal Decentralisation in the Czech and Slovak Republics, Post-Communist
Economies, Vol. 16, No. 3
Cez.cz (2012) Municipalities will likely get CZK 12 bln more from taxes beginning next year,
available at: http://www.cez.cz/en/cez-group/media/macroeconomic-news/1923.html ]
CEZ (2012b) Cabinet approves budget for 2013, available at: http://www.cez.cz/en/cezgroup/media/macroeconomic-news/2202.html
Chatrie, I. (2012) Subnational public finance in the European Union, a Dexia and CEMR
report, available at: http://www.ccre.org/docs/Note_CCRE_Dexia_EN.pdf
31
CIA news (2012); Municipal budgets deteriorate, 84 are risky, available at:
http://eu.cianews.cz/english-news/municipal-budgets-deteriorate-84-are-risky-482665/
Contiguglia, C. (2011) Austerity measures take effect, Prague Post, available at:
(http://www.praguepost.com/business/7017-austerity-measures-take-effect.html)
Czech Statistical Office (various), available at
http://www.czso.cz/csu/2008edicniplan.nsf/engpubl/3106-08for_the_4th_quarter_of_2008)
EC (2011) Investing into European Competitiveness: Contribution of the Czech Republic to
Europe 2020 Strategy National Reform Programme of the Czech Republic 2011, available at:
http://ec.europa.eu/europe2020/pdf/nrp/nrp_czech_en.pdf
EC (2012) WHITE PAPER - An Agenda for Adequate, Safe and Sustainable Pensions
ECOTEC (2006) Strengthening social dialogue in the local and regional government sector in
the ‘new’ Member States and candidate countries , available at:
http://www.ccre.org/docs/T_599_33_3520.pdf
Eurofound (2009). Czech Republic: Industrial Relations Profile, available at:
http://www.eurofound.europa.eu/eiro/country/czech.republic.pdf
EPSU (????) Collective bargaining in the public services – Country Profile: Czech Republic,
available at: http://www.epsu.org/IMG/pdf/CzechRepublic.pdf
EPSU (2010) Letter of protest to the proposed attacks to Czech public services, availabe at:
http://www.epsu.org/a/6834
EPSU (2011) 50,000 demonstrate in Prague against cuts and labour reforms, available at:
http://www.epsu.org/a/7655
EPSU (2011b) Austerity measures lead to 2,500 job cuts in ministries with more expected,
available at: http://www.epsu.org/r/168
EPSU (2012) Funding of Local and Regional Government: Key challenges, solutions to growth
and alternatives - A very difficult economic context, Initial report for a joint CEMR EPSU
workshop: January 2012 Labour Research Department
Eliáš, A. (2012) Jednání vlády s představiteli Svazu měst a obcí, Denik - veřejné správy,
available at http://www.dvs.cz/clanek.asp?id=6538622
Fanta, P., Sumpikova Fantova, M. And Ochrana, F. (2008) Public management reforms: Czech
Republic, in Bouckaert, G., Nemec, J., Nakrosis, V., Hajnal, G., Tonnisson, K. (eds.) Public
Management Reforms in Central and Eastern Europe. Bratislava: NISPAcee
DGAFP (2008) Administration and the Civil Service in the EU 27 Member States -27 country
profiles, MINISTÈRE DU BUDGET, DES COMPTES PUBLICS ET DE LA FONCTION PUBLIQUE,
available at: http://www.fonctionpublique.gouv.fr/files/files/publications/etudes_perspectives/Administration_and_the_Civil
_service_in_the_27_EU_Member_states.pdf
32
Druker, J. (2012). Nations in Transition – Czech Republic, available at:
http://www.freedomhouse.org/report/nations-transit/2012/czech-republic
Heyes, J. (2011) Labour ministries and labour administration in transition: recent
developments and future prospects, Labour Administration and Inspection Programme
LAB/ADMIN, Working Document Number 16, International Labour Organization (ILO) –
Geneva
Hold, G. (2010) EC slams Czech austerity measures, The Prague Post, available at:
http://www.praguepost.com/business/4041-ec-slams-czech-austerity-measures.html
Illner, M. (2008). Bottom-up territorial consolidation in the Czech Republic. Presentation at
the Conference Lessons Learned from Territorial Consolidation Reforms – the European
Experience. Available at
http://www.coe.int/t/dgap/localdemocracy/programmes_democratic_stability/imc/Warsaw
_Documents/Warsaw_Illner.pdf
IMF 2012 [Country Report No. 12/115].
Jedlicka, J. (2012) Peníze z EU budou i po roce 2013, ale v menším objemu, available at
http://www.dvs.cz/clanek.asp?id=6531634
Kameníčková (2012a) Špatný rok 2011, Denik - veřejné správy, Municipality and finance
magazine, available at: http://denik.obce.cz/clanek.asp?id=6555393
Kameníčková (2012b) Rozpočtové určení daní – vývoj financování, naděje a očekávání , Denik
- veřejné správy, Municipality and finance magazine 4/2012, available at:
http://www.dvs.cz/clanek.asp?id=6566995
KPMG (2012) Czech Republic - Austerity measures include increased income tax, VAT rates,
available at:
http://www.kpmg.com/global/en/issuesandinsights/articlespublications/taxnewsflash/page
s/czech-republic-austerity-measures-increased-income-tax-vat-rates.aspx
Kuncová , R. (2010) Labour Law Regulations Valid in the Czech Republic, available at
http://www.czech.cz/en/Life-Work/Getting-a-job/Advice-on-how-to-get-a-job/Labour-LawRegulations-Valid-in-the-Czech-Republic
Laca, P. (2012) Czech Cabinet Approves Budget Draft Assuming Tax Increase, Bloomberg,
available at: http://www.bloomberg.com/news/2012-09-26/czech-cabinet-approvesbudget-draft-assuming-tax-increase.html
Mesto Vsetin (2012) Vsetínská radnice připravuje a uskutečňuje úsporná opatření. Available
at http://www.mestovsetin.cz/vsetinska-radnice-pripravuje-a-uskutecnuje-uspornaopatreni/d-503338/p1=28131&p3=,
33
Myant, M. (2010) Trade unions in the Czech Republic, Brussels: ETUI aisbl, available at
http://www.etui.org/Publications2/Reports/Trade-unions-in-the-Czech-Republic
Noviny.cz (2012) Czech municipalities show surplus in 2011 despite revenue fall, availabe
at:http://www.financninoviny.cz/english/zpravy/czech-municipalities-show-surplus-in-2011despite-revenue-fall/811724&id_seznam
Oxford Economics (2012) Country Economic Forecast: Czech Republic - Highlights and Key
Issues, available at: http://www.oxfordeconomics.com/Samples/CZECDB.pdf
Pelcova, J. (2011) Ústavní soud zrušil zákon, který byl schválen v režimu legislativní nouze,
Ústavní soud, available at http://concourt.cz/clanek/5000
Public Governance Committee (2005) Responses to country questionnaires,
Organisation for Economic Co-operation and Development, available at:
http://www.oecd.org/gov/41958673.pdf
Ritter, S. (editor) (2006?) Structure of the civil and public services; in the member and
accession states of the European Union, 2nd edition
Salzmann (2010) Czech public sector workers strike against austerity measures, Word
Socialist Website, available at: http://www.wsws.org/articles/2010/dec2010/czec-d10.shtml
Sedmihradska, L. (2011). Voluntary Municipal Associations in the Czech Republic: Unfulfilled
Expectations? In Paweł Swianiewicz (ed.) ‘Working Together: Intermunicipal Cooperation in
Five Central European Countries. Open Societiy Foundations. Available at
http://lgi.osi.hu/publications/2011/421/Swianiewicz_Working_Together_final_08_20_2011.
pdf
ŠPAČEK, D., ŠPALEK, J. (2007) Communication and Electronic Public Administration: Some
Issues in the Context of the Czech System of Public Administration. In Lessons and
Recommendations for Improvement: Central and Eastern European Public Administration
and Public Policy. Bratislava: NISPAcee, pp. 217-238
Štěpánka,P. (2013) Development of collectively agreed working conditions 1993–2011,
European Foundation for the Improvement of Living and Working Conditions. Available at:
http://www.eurofound.europa.eu/eiro/surveyreports/cz1209019d/cz1209019d.htm
The Economist (2012) Another lease of life. Available at
http://www.economist.com/blogs/easternapproaches/2012/11/czech-politics-1
Tomeš, I. (2004?) The evolving structure of Collective Bargaining in Europe 1990-2004:
Research Project Co-financed by the European Commission and the University of Florence
(VS/2003/0219-SI2.359910); National Report - Czech Republic, available at:
http://eprints.unifi.it/archive/00001155/01/Repubblica_Ceca.pdf
34
Týden (2012) Ministerstvo životního prostředí sníží platy, bude i propouštět. Available at
http://www.tyden.cz/rubriky/byznys/cesko/ministerstvo-zivotniho-prostredi-snizi-platybude-i-propoustet_244522.html
UN (United Nations) (2004) Czech Republic: Public Administration Country Profile, Division
for Public Administration and Development Management (DPADM), Department of
Economic and Social Affairs (DESA)
Úřad vlády ČR (2011) Národní program reforem České republiky 2011 - III. Reformní opatření
ČR, available at: http://www.businessinfo.cz/cs/clanky/narodni-program-reforem-opatreni3325.html
Urbánková, P. (2012) Loutocký (Brno): Město loni hospodařilo s přebytkem 200 milionů, CIA
news, available at: http://www.cianews.cz/rozhovory-cianews/loutocky-brno-mesto-lonihospodarilo-s-prebytkem-200-milionu/
Veverková, S. (2011) Czech Republic: Representativeness study of the European social
partners organisations: Public administration sector, Eironline, available at:
http://www.eurofound.europa.eu/eiro/studies/tn0912027s/cz0912029q.htm
Veverková (2011b) Amendments to social and labour law come into force, Eironline,
available at: http://www.eurofound.europa.eu/eiro/2011/02/articles/cz1102049i.htm
Vidlakova´ , O., (2006). The Reform and Modernization of Central State Administration in the
Czech Republic. Presented at a NISPAcee Conference. Online at:
http://unpan1.un.org/intradoc/groups/public/documents/NISPAcee/UNPAN024319.pdf
Vláda Ceske Republiky (2010) Úsporný rozpočet na rok 2011, available at:
http://www.vlada.cz/cz/media-centrum/aktualne/usporny-rozpocet-na-rok-2011-75757/
Vláda Ceske Republiky (2012) Úsporná opatření vlády pro roky 2013 až 2015, available at:
http://www.vlada.cz/cz/media-centrum/aktualne/usporna-opatreni-vlady-pro-roky-2013-az2015-94630/
Youngmo (2011) A Comparative Study of the Legislative Provisions on Collective Bargaining,
Trade Union Rights and Social Dialogue in Selected Countries: South Africa, Republic of
Korea, Japan, Philippines, China and Czech Republic - available at
http://apirnet.ilo.org/resources/a-comparative-study-of-the-legislative-provisions-oncollective-bargaining-trade-union-rights-and-social-dialogue-in-selected-countries-southafrica-republic-of-korea-japan-philippines-china-and-czech-republic
35
Appendices
Appendix 1:
Scheme 1:
Public Administration
Local
Government
Central Government
State administration
Central Level
14 ministries
11 other central
administrative authorities
MINISTRIES
-Ministry of Finance
-Ministry of Foreign Affairs
- Ministry of Education, Youth and Sports
- Ministry of Culture
-Ministry of Labour and Social Affairs
- Ministry of Health
-Ministry of Justice
-Ministry of Interior
- Ministry of Industry and Trade
-Ministry for Regional Development
- Ministry of Agriculture
-Ministry of Defence
-Ministry of Transport
- Ministry of the Environment
Self-government
Territorial Level
- Regional (since 2002)
(14 regions, including
Prague as a capital)
- Municipal
(Including type II)
(6 245 as of 2011- OECD)
- Municipal (type II)
* Ministry of Informatics abolished 31st May 2007
Adapted from: ŠPAČEK & ŠPALEK, J. (2007)
36
Appendix 2:
While a clear cut differentiation between responsibilities/ services between the state
administration and self-government (local government) is difficult, the main responsibilities
within these two parts of the public sector can be said to relate to:
Source: ŠPAČEK & ŠPALEK, J. (2007)
The management of activities related to those listed under a) can be significantly adapted in
accordance to the specific local context within which the municipality operates, while those
listed under b) are very much centralised and a uniform implementation of these services is
being preferred.
Appendix 3:
Austerity measures that took effect on 1st Jan 2011 include:
TAXES
- changes to the system of taxes are to bring 4.3 billion crowns to the state budget and
another 1.3 billion crowns to other public budgets.
1. Flood tax - tax payers' tax reliefs will be cut by 1200 crowns annually. The money is to be
spent on the removal of the damage this year's floods inflicted on some regions. The
measure will only apply in 2011.
2. Taxation of working pensioners - pensions received by pensioners who will earn more
than 840,000 crowns annually will be taxed.
37
3. Taxation of soldiers' annuity - annuity and bonuses paid to former career soldiers will be
subject to a 15 percent withholding tax. The accommodation subsidy paid to the active
soldiers who do not live in a service flat will be taxed as from 2012.
4. Presidential tax - the pay as well as the flat subsidy will be taxed. The same will apply to
the rent and financial subsidies paid out to former presidents.
5. Taxation of subsidies paid out to deputies.
6. Abolition of tax reliefs for employment of handicapped people - firms and businesspeople
who employ handicapped people who constitute more than 50 percent of the whole
personnel will no longer enjoy tax reliefs.
HOME-BUILDING SAVINGS
Reduction of state subsidy to home building - this year's state subsidy will be taxed with 50
percent. State subsidies will be lowered in the years to come, with an expected saving of 6
billion crowns in 2011 and 6.5 to 8.5 billion crowns in 2012.
WELFARE
1. Sickness benefits will be lowered, with an expected saving of 2.3 billion crowns annually.
2. The state will only pay out sickness benefits as from the 22nd day of illness, instead of the
15th day at present. Employers will be paying out the benefits for one more week. The
measure is to be valid for three years, with an expected saving of 1.7 billion crowns.
3. Birth allowances will only be paid for the first born child and to the families whose income
does not exceed 2.4 times subsistence level, with an expected saving of 1.3 billion crowns.
4. The list of reasons for which an agency or a labour office may be stripped of authorisation
to mediate employment will be extended.
5. People registered with a labour office will no longer be able to receive benefits and at the
same time work as is allowed in selected cases now, with an expected saving of 820 million
crowns.
6. People who will leave a job on agreement with the employer or at their own request will
only be entitled to a lower unemployment benefit, constituting 45 percent of their monthly
net income.
7. Unemployment benefits will only be paid out after a period corresponding to the paid out
severance pay.
8. The lowest level subsidy to care for a close person will be cut from 2000 to 800 crowns
monthly, with an expected saving of 1.53 billion crowns.
38
SUBSIDIES TO POLITICAL PARTIES AND MOVEMENTS
Subsidies the state pays to political parties and movements will be cut by 5 percent as from
next year and by 10 percent as from 2012, with an expected saving of 21 million crowns in
2011.
REMUNERATION OF CIVIL SERVANTS AND PUBLIC SECTOR EMPLOYEES - an amendment to
the Labour Code allows the government to issue a directive determining groups of
employees with whom a contractual pay can be agreed on. The opportunity to set a base
pay irrespective of the number of the years worked is to apply to all civic servants and public
sector employees, with the exception of teachers.
The government counts with a 10 percent reduction in the volume of money for pay in the
public sector. The salaries of politicians, judges and state attorneys will decrease by 5
percent next year within this measure.
($1=19.289 crowns)
Source: http://praguemonitor.com/2010/12/29/govt-austerity-measures-take-effect-1-january2011
Appendix 4:
39
Appendix 5 Average gross monthly nominal wage (per full-time equivalent employee)
in the years 2005-2011
Non-business sphere
Monthly nominal wage (CZK)
Indicies (%) ; (previous year = 100)
- nominal wage
- real wage
2008
23 334
104,2
2009
24 411
104,6
2010
24 453
100,2
2011
24 469
100,1
98,0
103,6
98,7
98,2
Source: Development of the Basic Living Standard Indicators in the Czech Republic 1993-2011. Prague : Ministry of Labour and Social
Affairs, June 2012. 28 August 2012, p. 38-40. ISBN 978-80-7421-047-1.
http://www.mpsv.cz/files/clanky/13443/Vybrane_ukazatele__anglicka_verze.pdf
Appendix 6 Collective agreements in public administration and services in 2008 – 2011
Year
2008
2009
2010
2011
Salaries and financial funds
Detailed
Detailed conditions
Ration between Creation Rules for resource
conditions
for rewarding by
the guaranteed of a
allocation into a
for
bonuses
and incentive
social
reward fund and rules
rewarding
pays (merit
fund
for compensation paid
by merit pay
pays, bonuses)
from a reward fund**
20
34
41
7
155
144
10
25
25
4
112
62
4
41
42
12
175
112
1
26
30
9
126
82
Conditions for trade union activities
Enterprise social care
Annual
growth of
average
salary
Year
Collection
of
membersh
ip fees by
salary
deductions
Insurance
payment to
employer
compensating
long-term released
TU officials
Agreed time
scale of
relaxation of TU
officials with
salary
compensation
Employer
contribution
to enterprise
catering**
Contribution
to pension
insurance**
2008
126
13
54
148
89
40
Contribution to life
insurance**
22
2009
2010
2011
94
156
111
10
17
10
34
73
60
108
158
125
80
106
79
23
30
23
*
Act No. 250/2000 Sb., ** Only municipal authorities.
Source: Odvarkova, Marketa. Social dialogue in municipal authorities in the CR (In Czech). Master`s thesis. Prague : University of Economics,
2012, Appendix 6. Collective agreements bargained by the Trade Unions of State Authorities and Organizations, data based on ISSP.
Collective bargaining and bargaining arrangements in the period 2008-2011
The Information system of working conditions (ISPP) analyzes collective agreements in public
administration, but not separately for municipal authorities. Notwithstanding it provides a
picture of trends in collective bargaining in the area of remuneration. In the period 20082011 collective agreements register annual growth of average earnings and in 2011 for the
first time negotiating pay cuts. The number of collective agreements, in which an annual
salary growth is agreed, gradually decreases (37 collective agreements in 2008, 22 in 2009,
11 in 2010 and 5 in 2011). The same decreasing tendency exists in negotiating an average
salary growth rate that is at the level of 4.2 % in 2008 and 2.5 % in 2011. As mentioned
above about a change in 2011, a reduction of an annual salary is negotiated in 6 collective
agreements by cuts of the total amount of pay funds and in 5 agreements by cutting some
pay components. In this year the total number of collective agreements negotiated in the
public service and administration is also reported for the first time (322 collective
agreements) and there are analyzed ways of pay negotiation. Salaries are managed
according to the practice in 71 collective agreements, ranges of pay tariffs in 80 agreements
and a contractual salary includes 4 agreements. Budget cuts thus have a negative impact on
indexation of wages, and implementation of ranges of pay tariffs may determinate wage
gaps which are hardly justified by performance appraisal with respect to characteristics of
jobs in public administration.
Appendix 7:
Definition for Municipalities and Regions
Municipality...
...implies a territory based on the boarders of the municipality and it has a character of
public legal cooperation. Municipalities have own property with which income can be
generated. A municipality has got own financial means and puts together its own budget. A
municipality occurs in legal matters with its own name, and at the same time carries the
responsibility. A municipality with more than 3000 inhabitants may call itself city.
The highest organ of the municipality is the “municipal council’ – it has authorisation to
make important decisions in the context of the autonomous scope of the municipality. The
executing organ is the “council of the municipality” and is made up of "Starosta"(similar to
mayor) –it represents the municipality externally and completes tasks that are determined
by law. Further, the ‘council’ is made up of representatives of the mayor, the vice-mayor (or
vice-mayors) and council-members. The municipal council elects and appoints members of
the council of the municipality
Within the competence of the council, the chairman of the trade unions, which can operate
in the municipality, is also to be named. A further body of the self-governing territorial unit
is a municipal office divided into departments and subdepartments, the municipal office is
staffed by the mayor, the vice-mayor (or vice-mayors), the secretary and other municipal
employees.
41
The regions and municipalities are being assigned an receive financial means for the
realisation of diverse duties of the state. Prague has its own arrangement/ regulation.
Regions...
... are higher self-governing units, according to the law: 347/1997 which regulates this.
The situation is similar to those of municipalties as regions have the right to own property
and have their own income, with which they can economise. And regions are also liable and
legally appear with their name.
The executing organ/body of the region is the council of the region. The council has a right
to integrate own legal initiatives into legislation i.e. to submit law suggestions, and can set
up advising bodies. Externally, the region represents itself through "hejtman" (governors) –
he is being elected from its own benches as also his representatives are. These then
represent him in the absence of the Hejtman (governor). Further organs are again, specialist
areas and departments. Within these sits also the office of the director of the regional
government and the office of the hejtman (governor). The scope of doing of the region is
legislated by law.
Self- governing units have relatively high freedom in their doing/ conducts. The state is the
executor of the control of the self-governing units. There are also important relations
between regions and municipalities. The home office/ Ministry of the Interior controls the
activities of the municipalities
Appendix 8: Comparison of ER for municipal public servants and private sector
employees
The nature of the employment relationship for public servants of self-governing territorial has a similar
(legal/legislative) character to those in the private sector, although with public service-specific elements (with
regards to terms of employment). These relations are being governed by the Act No. 312/2002 Coll and the
Labour Code.
Comparison of servants in self-governing territorial units and employees in the private sector
Servants of self-governing ter. Units
Employees in the private sector
(according to Act No. 312/2002 Coll., on officials/ public
(according to the Labour Code)
servants)
Employment relations are based on a contract(ual)
system, which implies that the law exactly specifies
processes of recruitment and selection, training and
development, redeployment and redundancy
Prior to conclusion of the contract the post must have
been externally/ publicly advertised.
Contract is for an indefinite/ unlimited period.
Only under certain conditions for a fixed period of time.
Transfer to another job is only possible if employee
proved himself/herself as incompetent.
For lead servants, the employment relation is not
terminated when he/she is being re-called from his/her
position – has to get another job offered.
Employment relations based on
working/employment contract negotiated
between employer and employee.
Holiday leave: 5 weeks.
Holiday leave: minimum 4 weeks.
In case of emergency or if the state is in danger,
employment duty/ service can be commanded/ ordered.
Employment duty can only happen after/ by
agreement.
42
Does not have to be.
Contract is for an indefinite period, but can be
limited/ fixed-term.
Employer can transfer employee wherever it
suits.
The self-governing territorial unit is responsible for
damage on assets caused to a servant while at work.
The law provides for an additional compensation for
Only get severance pay, but the labour code
increasing a public servant’s duties (at the same time
regulates no additional compensation
public servants have a right for severance pay).
Duty to develop qualifications by further training.
Employee is obliged to acquire further
The law precisely defines types of training and
qualification by training, education or other
development.
development
Servant is not allowed to be a member of a governing,
controlling or regulatory body or of a legal entity whose
undertaking it is to do business (unless the self-gov.
territorial unit delegates him/her to such a body).
The reason is to prevent corruption, clientelism and
conflicts of interest.
A servant can perform other compensated activities, but Besides their employment activities, employees
they have to be agreed by a written acceptance from a
can perform other compensated activities, only
self-governing territorial unit where he/she is employed
with a prior employer`s written acceptance
No competition clause/addition/addendum can be
Employer can agree with his/her employee this
agreed/ sealed
clause/addition/addendum
Adopted from: Melichárek, Josef. The motivation and stabilisation of public administration
empolyees. Phd dissertation. Praha : Vysoká škola ekonomická, 2009. pp. 18-19
Appendix 9:
Agreed level of wage increases (%)
Source: Štěpánka,P. (2013)
43