Czechs prepare for major job market reforms

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The Czech labour market was hit hard by the economic crisis and the new government will need to implement key reforms if the country is to achieve its employment target under the 'Europe 2020' strategy. EURACTIV.cz reports from Prague.

In June, the Czech government approved the country's own target: a 75% employment rate among 20-64 year olds by 2020 – the same figure as the EU's overall objective.

''Raising the employment rate is one of the key factors for future growth, especially in view of the current [unfavourable] demographic development of the Czech Republic,'' Václav Kužel, head of the employment policy strategy department in the Ministry of Labour and Social Affairs, told EURACTIV.cz.

''It is a basic condition, not only for our future competitiveness, but also for the EU as a whole. We are an inseparable and interconnected part of it,'' he added.

To achieve its national goal, the Czech Republic has set itself a number of partial targets: raising the employment rate among women to 65% and among older workers to 55%; reducing unemployment among 15-24 year olds by a third (compared with 11% in 2010); and reducing unemployment among lower-skilled workers by a quarter (compared with around 13% in 2010).

New government unlikely to change targets

The Czech targets are the result of negotiations between the European Commission and the government of former Prime Minister Jan Fischer. Although the Commission's suggestions are only indicative, it is possible that the new coalition government, led by Petr Ne?as of the centre-right Civic Democratic Party, will decide to renegotiate the figures.

A source close to Juraj Chmiel, a former European affairs minister, does not think that this will happen. ''The goal was set with respect to the needs of the Czech economy, in other words to maintain or even increase the living standards of the citizens of the Czech Republic. From this point of view, there are no reasons for it to be reassessed,'' he told EURACTIV.cz.

However, Václav Kužel from the Ministry of Labour and Social Affairs believes it is possible that Ne?as's cabinet could make some changes to the goals. ''The new government could reassess the national partial targets in terms of priorities or how to meet them,'' he said.

Impact of crisis over?

But is the Czech employment objective really achievable? During the first half of the last decade, the employment rate in the country gradually improved. In 2000, the rate among 20-64 year olds was 70.9%. Two years later it reached 71.7% and by 2008 it had reached a high of 72.4%.

But the onset of the financial crisis and its impact on the labour market reversed the positive trend, as the employment rate for 2009 shows: it fell to 70.9% that year, the lowest figure in the previous ten years.

Václav Kužel notes that the crisis ''hit mostly agency workers, foreign workers, older workers and negatively influenced the prospects of young people entering the labour market''. As some sectors were hit harder than others – the construction and processing industries in particular – male employees were more affected than female ones, he explained.

Despite the impact of the crisis, the most recent figures published by the Czech Statistical Office suggest that the downward trend is ending, with the unemployment rate also falling by 1.4% in the latest quarter. Based on this, Kužel believes that the national target is ''achievable and desirable within the next decade,'' despite the current situation.

Deputy Minister for Industry and Trade Martin Tlapa agrees, but warned that the success of such a goal will depend largely on the development of both the global and Czech economies. ''If the European and Czech economies evolve predictably, we can sign up to these objectives,'' he told EURACTIV.cz.

Reforms and revisions required

What does the Czech government intend to do to fulfil the employment goals? ''In order to accomplish whichever country-specific goal of the Europe 2020 strategy, it is essential to restart economic growth,'' said Kužel from the Ministry of Labour and Social Affairs.

The country is therefore going to proceed with structural reforms and will try to boost labour flexibility, starting with a revision of its labour code. It will also work to cut administrative red tape for companies and seek to simplify conditions for SMEs.

An ongoing national debate has identified several weaknesses that may obstruct implementation of the objective, the Ministry for Labour and Social Affairs noted. Among others, the inflexibility of the labour market and a lack of coordination between employment policy and other policies have been cited as key issues.

Raising the employment rate to 75% is one of the five priorities of a draft ten-year economic plan unveiled by the European Commission in March, called 'Europe 2020' (EURACTIV 03/03/10).

The strategy defines five headline targets at EU level, which member states will be asked to translate into national goals reflecting their differing starting points:

  • Raising the employment rate of the population aged 20-64 from the current 69% to 75%.
  • Raising the investment in R&D to 3% of the EU's GDP.
  • Meeting the EU's '20/20/20' objectives on greenhouse gas emission reduction and renewable energies.
  • Reducing the share of early school leavers from the current 15% to under 10% and making sure that at least 40% of youngsters have a degree or diploma.
  • Reducing the number of Europeans living below the poverty line by 25%, lifting 20 million out of poverty from the current 80 million.

In a series of articles, the EURACTIV network will present the state of play in individual EU countries on each of the targets. This series looks at how member states react to the employment target.

The EURACTIV network has found that Eastern countries are doubtful about the poverty target and face an uphill battle to attain the climate goals (EURACTIV 06/05/10; EURACTIV 16/07/10). The education picture is mixed, while most member states will adopt R&D targets below the EU-wide goal of 3% of GDP (EURACTIV 23/08/10; EURACTIV 04/06/10).

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