Czech Republic: EIRO Annual Review - 2009

  • Observatory: EurWORK
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  • Published on: 10 Januar 2011



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Social dialogue and collective bargaining in 2009 were affected by the current economic crisis, which had an impact particularly on collective bargaining for wages and salaries. Based on the trade union data, the number of employees protected by collective agreements has also decreased.

1. Political developments

2009 was the last year of the coalition of Civic Democratics Party (Občanská demokratická strana, ODS), The Christian and Democratic Union – Czechoslovak people´s party (Křesťanská a demokratická unie – Československá strana lidová, KDU-ČSL) and Green Party (Strana zelených). During 2008 and the beginning of 2009 disputes about the implementation of economic and social reforms arose in the Parliament. On 24 March 2009 The Chamber of Deputies (Poslanecká sněmovna) voted against the coalition government (vláda ČR) led by Mirek Topolánek (ODS) – at the fifth attempt and with the lowest possible number of votes. The government resigned on 8 May 2009 and was replaced by a non-political government which has been agreed on by most political parties represented in the Parliament. On 9 April 2009 the previous chairman of the Czech Statistical Office (Český statistický úřad, ČSÚ) Jan Fischer (non-party man proposed by ODS) was appointed Prime Minister. By agreement of parliamentary parties, the government of J. Fischer should have bridged over the period of time until the elections on 28 and 29 May 2010.

At the European Parliament elections ODS received 9 mandates, ČSSD 7, KSČM 4 and KDU ČSL 2 mandates.

The EU Council Czech Presidency took place during the first half of the year (CZ0907019I). The EU Presidency was taken over by the Czech Republic, which was one of four member states where the ratification process of the Lisbon Treaty had not been completed. During the Czech Presidency the Lisbon Treaty was approved by the Chamber of Deputies of the Czech Parliament on 18 February and by the Senate on 6 May. On 29 September 2009 the Czech Constitutional Court (Ústavní soud ČR) received a proposal for a review of the compatibility of the Treaty and the Czech constitution submitted by a group of Senators predominantly from ODS. To sign under the ratification, President (Prezident ČR) Václav Klaus requested an exception from the EU Charter of Fundamental Rights which should guarantee that the Lisbon Treaty will not constitute a basis for breaching the post-war so-called “Benes Decrees”. The EU met the Czech President’s requirement, promising the same exception for the Czech Republic as that one valid for the United Kingdom and Poland. After the Czech Constitutional Court stated that contested articles of the Treaty are not contrary to the constitutional order of the CR, the Czech President ratified the Lisbon Treaty, signing it on 3 November.

The election to the Chamber of Deputies of the Parliament of the Czech Republic will be held on 28 and 29 May 2010 and the local authorities elections in autumn 2010.

The Fischer’s bridging-over government, which was not formed following elections and had only a limited mandate for solving substantial problems, resigned e.g. on the original plan of the Topolánek’s coalition cabinet to bring in the amendment and achieve its approval in the Parliament. Completion of the legislative process in this context was welcomed mainly by trade unions, who disagreed with the upcoming amendment to the Labour Code from the very beginning.

2. Collective bargaining developments

According to data from the biggest trade union umbrella organisation, Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS) (which represent a majority sample), out of a total of 32 trade unions (ditto in 2008) associated in ČMKOS concluded in 2009 a total of 18 HLCAs (ditto in 2008) that covered 5,105 employers (5,364 in 2008) and approx. 536,800 employees (approx 608,000 in 2008).

The applicable legislation provides for a duty to present the Ministry of Labour and Social Affairs of the Czech Republic (Ministerstvo práce a sociálních věcí ČR, MPSV CR) with a copy of a concluded HCLA for storage. In 2009 MPSV CR had received and registered 25 HLCAs (ditto in 2008).

The process of expanding the scope of collective agreements to include other employers continued in 2009 as well, with (in ČMKOS) 4 agreements (2008: 3 HLCAs) being expanded. The binding nature of these higher-level collective agreements was expanded to include a further 4,040 employers (2008:3,975) with more than 358,000 employees (2008: more than 362,000). Therefore, the HLCAs concluded by the trade unions associated with ČMKOS for 2009 apply to almost 9,150 employers (almost 9,400 in 2008) and protects almost 896,000 employees (970,500 in 2008), representin about 22% of all employees (approx. 23% in 2008).

As far as CLCAs are concerned, there is no central register of CLCAs in the CR. According to the trade unions associated with ČMKOS, 3,082 CLCAs (3119 in 2008) applying to approx. 1,105,700 employees (approx. 1,110,100 in 2008), representing 27% (2008: 26.5%) of all employees in the ČR, were concluded in 2009 with 6,132 employers (6,344 in 2008) where their trade union organisations were active.

A negative impact of the economic downturn in the Czech economy in 2009 can be documented by the interannual decrease in figures (except for the number of concluded HLCAs, which remained the same both in 2008 and 2009) regarding the scope of collective bargaining within ČMKOS and the level of collective agreement coverage of employers and employees.

Pay

In the overwhelming majority of HLCAs for 2009 an interannual growth was agreed not in terms of the nominal pay, but in scale (basic, minimum) wages, extra pays, or other wage components. There was an increase in the number of HLCAs, which either did not adjust the pay trend at all, or they adjusted it, permitting however also another even lower adjustment in company-level collective agreements. Where agreement was reached, the agreed wage increase ranged between 0 to 6.5 %, when in most HLCAs an interannual growth of the average pay has been agreed at the level of expected growth of consumer prices. Some HLCAs have not adjusted the pay growth, with the plan for this area to be adjusted in CLCAs. Employees’ remuneration was covered in more than 95% of CLCAs in 2009 (identically as in 2008). In recent years (except for 2007) the percentage of CLCAs adjusting wages ranged between 73 up to 78%. In 2009 the number decreased by almost 18%. Also in 2009 the most widely-spread form of wage trend agreement consisted in the arrangement of an increase in the average nominal pay (included in almost 27% of CLCAs, however, in 2008 it was in more than 41.3%). In 2009 CLCAs, adjusting the wage increase in the form of average nominal pay increase, included an increase by 4.4%.

Working time

According to ČMKOS, data 47% of HLCAs (53% in 2008) contain provisions for shortening working time to 37.5 hours per week without a reduction in wages. About 50% of HLCAs (52.9% in 2008) extend holiday entitlement to 5 weeks (4 week according the Labour Code).

Working hours (at least in one of the working regimes) was negotiated in 94.7% CLCAs (95.2% in 2008), of which approx. 65% specifies a uniform duration of working hours for the whole organization. In approx. 77% of CLCAs that specify the uniform duration of working time for the whole organization, a weekly working time fund of 37.5 hours was agreed.

Since 2007 it has been possible within collective agreements to arrange detailed conditions for application of the working time fund. In 2009 this possibility was utilised in almost 6% of CLCAs, which represents a slight interannual increase (1.8%).

Conditions for applying specific forms of work arrangement did not become a subject of collective bargaining in 2009 either. General conditions for vocational training of employees were agreed in approx. 27% of CLCAs (in 2008 in 28.5%), however specific programmes with the number of employees were included in less than 1.5 % of CLCAs only (in 2008 in 1.1%). Almost one fourth of CLCAs (the same as in 2008) contained measures for equal treatment and observing the ban on discrimination.

3. Legislative developments

In June an act on equal treatment and legal instruments of protection against discrimination was adopted, the Anti-discrimination Act, taking effect from September 2009. It constitutes the first comprehensive legal regulation in this field in the Czech Republic (CZ0806029I).

MPSV ČR has worked out an amendment to the Employment Act, where they tighten conditions for issuing licences for employment intermediation, acknowledgment of professional qualification of employment agency representatives.

The amendment to the Act on employees’ protection in the event of their employer’s insolvency extended the decisive period for which employees may file their pay claims.

4. Organisation and role of the social partners

No significant changes have been reported in 2009.

5. Industrial action

There is no legally defined reporting duty in this area. According to ČMKOS data (for ČMKOS only), a dispute was resolved through a mediator during the negotiation of an HLCA in one case (three cases in 2008) and during the negotiation of a CLCA in one case (12 cases in 2008). No dispute was resolved before an arbiter during the negotiation of an HLCA (in one case in 2008), of an CLCA there was no case, too (as in 2008). No strike alert during the negotiation of an HLCA was announced in 2009 (as in 2008). In the case of CLCA there were no strike alerts announced during the negotiation (7 in 2008). Three strike alerts were called outside collective bargaining (4 in 2008). No strike took place during the negotiation of an HLCA or CLCA in either 2008 or 2009. There were no strikes outside collective bargaining in 2009 (3 strikes in 2008).

In May trade unions held a demonstration protesting against companies allegedly using the crisis as a pretext to reduce wages and employee benefits (CZ0905019I). At the end of October, a nationwide protest of farmers took place against the low purchase prices for milk. Another public industrial action of farmers took place in early December, as a token of disagreement with the proposal of the Czech state budget for 2010 (CZ0911029I). In early November leaders of trade unions operating in the Prague public transport agreed to prepare a declaration of a strike, they criticized drawbacks in the financing of the transport company by the Prague City Hall and disagreed with the planned dismissal of employees or wage reduction (CZ0911039I, CZ0908039I). In early December about 3,000 fire fighters and policemen protested against public servants’ pay reduction.

No significant changes occurred in the regulatory environment.

6. Restructuring

The Czech national air carrier Czech Airlines (České aerolinie, a.s., CSA was in a long-lasting difficult economic situation. In November 2009 the entire management left and subsequently CSA became linked via its personnel with the prosperous company Prague Airport (Letiště Praha). Immediately after that the extraordinary shareholders’ meeting approved a plan of the long-term stabilisation of the airlines. After the change in the company management trade unions agreed to the employer’s requirement to reduce employees’ pays, while restructuring of the airlines should continue. In the course of 2009 and early 2010 approx. 1,350 employees including tens of pilots left the company (CZ0905029I).

At the end of September 2009, The Prague Public Transport Co. Inc. (Dopravní podnik hlavního města Prahy, DPP) reported a loss of CZK 2.34 billion (EUR 90 million). From January to the end of September 2009 DPP was employing 11,426 people; this represents, in the interannual comparison, a decline by almost 1.5%. The City Hall pressed for another radical cost reduction. In the course of a series of often dramatic talks between the trade unions and the Prague City Hall (Magistrát hlavního města Prahy) the strike committee and the crisis management team managed to agree on a compromise. Prague councillors agreed to terminate outsourcing, trade unions agreed to austerity measures regarding wages and employment (CZ0908019I).

7. Impact of economic downturn

Measures at the company level (CZ0908029I) mainly included the so-called partial unemployment. Pursuant to current law, introduction of partial unemployment must be preceded by agreement with trade unions and if there is no trade union operating in the company the decision shall be made by the respective labour office.

From the beginning of 2009 a four-day working week was applied for regular employees of the company Škoda Auto (Škoda Auto, a.s.). Based on agreement between the employer and the trade union, employees were receiving 75% of the average pay. After the “car-scrappage bonus scheme” had been introduced in Germany, the car manufacturer cancelled the reduced working week. The car manufacturer Hyundai Motor Manufacturing Czech, s.r.o. underwent a similar situation when the employer agreed with trade unions to reduce the working week to 4 days for 68% of the average pay (a turn occurred here also in March 2009).

At the sectoral and national level, a number of public initiatives were held in 2009 by social partners. They were mostly addressed to the Prime Minister or the government or intended for discussions at the national tripartite level – Council for Economic and Social Agreement of the Czech Republic (Rada hospodářské a sociální dohody, RHSD ČR). For example, already in January 2009 ČMKOS worded their requirements regarding a solution of impacts of the economic downturn and they asked the government to start immediately to deal with the crisis. At the same time, the Industry Confederation of the Czech Republic (Svaz průmyslu a dopravy, SP ČR) published their own requirements regarding short-term measures and asked the government to take a prompt and efficient response in the economic policy of the state. On 11 February 2009, representatives of the biggest organisations of the social partners held a meeting in Prague to develop measures to reduce the impact of the economic crisis on the Czech economy and jointly urged the government to fully involve them in developing measures to cope with the crisis (CZ0904019I). In April a general meeting of SP ČR took place in Prague, where a range of essential requirements arose. The confederation appealed to the Czech government, parliament and the entire political representation to fulfil them (CZ0905039I). In July at the meeting of the Confederation of Transport Trade Unions leaders of the most significant trade unions in transportation delivered an open letter to Prime Minister Fischer, asking a prompt adoption of the law on public passenger transport services which would set equal business conditions in the public transport.

8. Other relevant developments

In 2009 the Czech Republic acquired, via the state agency CzechInvest, foreign investments worth CZK 17 billion (cca. EUR 653,846,150), which is by CZK ten billion (cca. EUR 384,615,380) less than in 2008.

According to sociological surveys in 2009 the number of part-time job offers did not grow or even decreased. The assumption that the economic downturn could create space for applying alternative forms of employment in the Czech Republic did not prove true (CZ0909019I).

Employers responded to the crisis by a general reduction of non-financial benefits for employees, among others. The benefit reduction in companies did not exclude vocational training either.

Jaroslav Hála, VUPSV

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