This record reviews the main industrial relations developments in the Czech Republic during 2004.
Political developments
The Czech Republic’s accession to the European Union in May was followed by the country's first elections to the European Parliament in mid-June 2004. The elections brought defeat for two of the three parties making up the governing coalition, with the leading government party - the Czech Social Democratic Party (Česká strana sociálně demokratická, ČSSD) - coming fifth and gaining only two of the 24 seats reserved for Czech MEPs. The elections were won by the Civic Democratic Party (Občanská demokratická strana, ODS), with nine seats. The other opposition party, the Communist Party of Bohemia and Moravia (Komunistická strana Čech a Moravy, KSČM), came second, winning six seats.
Elections to the Czech Senate (Senát Parlamentu ČR) were held in mid-November (when the turn-out was just 18.5% of registered voters) and resulted in one-third of the Senate being replaced. The opposition ODS again won a clear victory (after winning 18 seats the party now has 36 senators, making it the largest party in the Senate). The governing coalition parties lost eight seats. CSSD was routed, failing to defend a single of its three seats and left with just seven senators.
Regional elections, also held in November, were also won by ODS (with 36% of the vote); KSCM was the second most successful party, with almost 20%. The strongest governing party, CSSD, came in third.
The most important international event was the Czech Republic’s accession to the EU on 1 May 2004, which was welcomed by all the leading political groups, the public and the social partners. For example, the biggest trade union federation, the Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS), issued a statement describing the day of entry to the EU as one of the most important milestones in the modern history of the Czech Republic.
After his party’s disastrous showing in the European elections, the Prime Minister and chair of the CSSD Vladimir Spidla resigned (he is now a European Commissioner). Stanislav Gross became the new Prime Minister and head of the CSSD. On 4 August, President Vaclav Klaus swore in Mr Gross's new government (Vláda ČR), with a cabinet made up of members of the CSSD, the Christian and Democratic Union-Czechoslovak People’s Party (Křesťanská a demokratická unie - Československá strana lidová, KDU-CSL), the Freedom Union - Democratic Union (Unie svobody - Demokratická unie, US) and three independents. When assembling his cabinet, the Prime Minister offered the ČMKOS union confederation the chance to take part in preparing the government declaration; ČMKOS accepted, and put forward a number of proposals ( CZ0410102N).
If the government accepts a proposal tabled by ODS, a national referendum on the EU constitution, originally scheduled for June 2006, could take place a year earlier, ie in 2005. However, the fact that no other elections are due in 2005 (with the exception of elections to certain municipal councils), would make organising a plebiscite in 2005 more costly.
Collective bargaining
'Supra-enterprise-level' and enterprise-level collective agreements are negotiated in the Czech Republic (CZ0412102F). In the case of supra-enterprise-level agreements, the Ministry of Labour and Social Affairs (Ministerstvo práce a sociálních věcí ČR, MPSV) registered 18 agreements in 2004 (26 in 2003). Supra-enterprise-level agreements signed by ČMKOS member unions in 2004 covered 4,730 employers (3,509 in 2003) and approximately 590,000 employees (644,280 in 2003). This information makes it possible to state that approximately 15% (2003: approximately 23%) of the total number of employees in the Czech Republic are covered by supra-enterprise-level agreements signed by trade unions affiliated to ČMKOS. These results were influenced by the impossibility of extending supra-enterprise-level agreements to non-signatories.
There is no central register in the Czech Republic for enterprise-level agreements, but regular, partial surveys are conducted. Specific data are only available for the majority of trade unions that are members of ČMKOS. According to ČMKOS, a total of 3,713 enterprise-level agreements had been signed for 2004 (compared with 4,036 in 2003), covering 1,099,884 employees (1,141,916 employees in 2003), which represents approximately 28.5% (2003: approximately 29%) of all employees in the Czech Republic. These figures represent the vast majority of enterprise-level agreements concluded. It is hard to estimate the remaining enterprise-level agreements signed, as it would be necessary to include collective agreements concluded by trade union organisations operating autonomously, ie outside the trade union federations, which is practically impossible.
Pay
The determination of wage developments and the level of agreed wages in collective agreements (the minimum wage and wage tariffs are valorised by law in the Czech Republic) are traditionally among the more complicated issues dealt with by collective bargaining.
To some extent, wage development is dealt with in all supra-enterprise-level agreements negotiated for private sector employees (in 'contributory organisations'- organisations receiving contributions from the state budget - there is very limited room for negotiating on pay). In most supra-enterprise-level agreements, 'pay developments' (defined as a particular increase in the average nominal wage, a commitment to maintain real pay levels or average pay growth in the form of raising pay rates, bonuses or other pay components) are linked to forecast inflation or made conditional on improved productivity. According to a ČMKOS estimate, the year-on-year increase in 2004 was approximately 4% (compared with 2.5%-3.2% in 2003). A total of 85% of supra-enterprise-level agreements contained an increase in pay rates (95% in 2003). Supra-enterprise-level agreements also regulate extra pay for overtime, work at night and during afternoon shifts, at weekends and in difficult and unhealthy environments.
Enterprise-level agreements regulate all the available forms of pay. Most frequently, in approximately 30% of enterprise-level agreements, a time-based wage and 'combined' systems are used (time-based, task-related and profit-sharing forms). As far as pay rates are concerned, a 12-level system (both hourly and monthly rates) remains the most widely used - in 2003 and 2004 this was used in slightly less than 40% of enterprise-level agreements. Approximately three-quarters of enterprise-level agreements regulate pay developments, most frequently in the form of increasing average nominal wages, maintaining real pay levels, increasing the average real wage, or possibly increasing the total volume of wage funds. Just under 15% of the total number of enterprise-level agreements in 2003 and 2004 tied wage development to the enterprise’s economic results. Enterprise-level agreements also usually set out conditions for the application of any other wage elements (such as 13th- and 14th-month payments and Christmas bonuses), remuneration linked to the achievement of work goals, long service awards and the permitted extent of overtime working.
Working time
After certain problems caused by a switch to 'net working time' were overcome - working time has been defined since 2001 as excluding breaks for food and relaxation, in application of EU legislation - a commitment to cut working hours (to 37.5 or possibly 38 hours a week) has in recent years featured in more than half of supra-enterprise-level agreements and in almost 95% of enterprise-level agreements. The extension of holiday entitlement by an extra week - an important provision, regarded by employees as a collective bargaining success - has become part of more than three-quarters of supra-enterprise-level and enterprise-level agreements.
Most supra-enterprise-level and enterprise-level agreements have traditionally included commitments increasing leave from work, above the level set by the Labour Code, for family-related or personal reasons, such as the birth of a child, caring for a child up to a certain age, the death of a family member, the employee’s wedding, moving house and looking for a new job.
Job security
Job security is not a priority area for collective agreements. Enterprise-level agreements are more likely to contain commitments in this respect, but the relatively detailed legislation on this area means that little room remains for collective agreements to regulate this issue. The provisions tend to give increased protection to certain categories of employees (people nearing retirement age or employees who have spent a certain amount of time working for the employer). Measures in this area are not systematically monitored.
Equal opportunities and diversity issues
Collective agreements contain provisions relating to equality and diversity, although commentators believe them to be relatively ineffective. Commitments and provisions have not yet been subjected to regular monitoring (except by ČMKOS) and for that reason there is a lack of statistical information on the actual content of collective agreements. Although ČMKOS started including the issue of equal opportunities for men and women in its research in 2004, it has so far only succeeded in acquiring data on the representation of women in teams that take part in collective bargaining within a sector (the aim was to obtain information that would help identify tools to improve sex equality in the labour market, in remuneration and in decision-making). According to these data, a total of 25 teams representing trade unions affiliated to ČMKOS took part in collective bargaining: 23 of these teams’ 110 total members were women.
Training and skills development
Employee training and skills development has not been one of the primary themes of collective agreements in the Czech Republic; most provisions touching on this issue are general and arguably lack focus. More specific commitments (especially in enterprise-level agreements) concentrate on specifying the focus of employee training organised by the employer, lay down detailed conditions for the release of employees for study purposes during employment, or trade union officials for seminars and trade union training. They also define various aspects of the employer’s attitude to vocational training and work undertaken by trainees.
Other issues
Other issues regularly featuring in collective bargaining include: social care for employees (recreation, including for employees’ children, discounted corporate food provision, employers’ involvement in employees’ healthcare, and employers’ contributions to supplementary pension insurance), usually financed out of the employer’s net profit; specification of the material conditions provided by the employer for trade union work; and measures aimed at deepening cooperation between employer and employee representatives.
Legislative developments
Besides the specific legislative measures mentioned above and below, new bills on occupational health and safety were debated and co-prepared by the social partners in 2004. A collective bargaining bill enabling higher-level collective agreements to be extended was prepared in collaboration with the social partners (CZ0410103F). In its programme declaration, the new government committed itself to proposing a system for new pay-as-you-go public accident insurance system that, it is hoped, will constitute a strong incentive to create improve safety at work. The social partners’ attitudes to the proposed accident insurance system differ: despite a number of comments, the trade unions essentially support the bill, while employers are opposed.
The organisation and role of the social partners
Two prominent trade unions, the Energy Workers Trade Union (Odborovy svaz energetiků, OSE) and the Czech Chemicals Trade Union (Odborovy svaz chemie CR, OS chemie) merged to form the ECHO Trade Union (Odborovy svaz ECHO, OS ECHO) in May 2004 (CZ0409101N).
Two major changes affecting tax legislation have the potential to increase the capacity of social dialogue. On 1 May 2004, an amendment of Act no. 586/1992 on income tax, entered into force, making it possible for trade union members to deduct membership dues paid to their trade union organisation. Despite this tax privilege for trade union members, union membership continued to fall in 2004. According to ČMKOS data on union membership, for example, the decline for ČMKOS as a whole was 9.22%. Other trade union federations are also affected by declining membership.
Similarly, employers can now deduct membership contributions paid in to an employers' organisation from their tax base.
On 16 September 2004, the representativeness criteria changed for employer organisations’ membership of the Council of Economic and Social Agreement of the Czech Republic (Rada hospodářské a sociální dohody ČR, RHSD ČR, which is the national tripartite forum. Previously, employers' organisations had to represent firms with at least 200,000 employees in order to participate; following the change, employers' organisations seeking to take part in the RHSD have to represent firms with at least 400,000 employees ( however, this change has not affected the current composition of employers’ representatives in RHSD). The requirement for the representativeness of trade union organisations represented in the RHSD remained unchanged in 2004 (at least 150,000 members). The government delegation in the RHSD was also increased as of 16 September 2004, from the previous seven members to eight. The chair and vice-chair of the RHSD are members of the government.
Industrial action
There is no duty to report strikes, demonstrations or other trade union actions, and since 1996/7 these types of action have not been centrally monitored. A recent survey undertaken by ČMKOS, which is restricted to trade union actions related to collective bargaining and the conclusion of collective agreements, found that the number of recorded cases was negligible (CZ0411104N). According to the available information, there was not a great deal of strike activity at all in 2004 (both within ČMKOS and not involving ČMKOS unions, and regardless of the motive for the strike). The following information on the main strikes and strike warnings during 2004 is therefore merely illustrative.
On 21 April 2004 there was a one-hour warning (protest) strike organised and called by the Trade Union on State Bodies and Organisations (Odborový svaz státních orgánů a organizací) along with a further 14 trade unions associating public services and administration workers. The aim was to express disagreement with a reduction in the earnings level of these employees as a result of the government’s decision to pay out just 10% of the 13th-month bonus payment to employees in the first half of the year. The issue of the remuneration of public sector workers was highly visible throughout the year, attracting the attention of both the social partners and the public and parliament (Parlament ČR, PČR) (CZ0411103N).
At the end of the year, the Trade Union of Workers in Woodworking Industry, Forestry and Water Management in the Czech Republic (Odborový svaz pracovníků dřevozpracujících odvětví, lesního a vodního hospodářství v ČR, OS DLV) (CZ0501101N) called a 'strike alert'. Member trade unions of the largest trade union in the Czech Republic, the Czech Metalworkers' Federation (Odborový svaz KOVO, OS KOVO), called three strike alerts in 2004 (in favour of signing an enterprise-level collective agreement, in protest against falling wages, consolidating performance standards, transferring production and lay-offs) and organised two protest meetings (against late wage payments). KOVO gives a figure of over 20 actions, including strikes, in 2003.
Employee participation
A draft amendment of the Labour Code, dealing with informing and consulting employees and transposing Directive 2002/14/EC was prepared during the course of 2004 and is currently making its way through the legislative process.
Upon promulgation in the Collection of Laws on 14 December 2004, Act no. 627/2004 of 11 November 2004, on the European Company Statute, entered into force. This Act regulates legal relations of the company where these are not defined by the EU Regulation on the statute of the European Company and EU Directive supplementing the statute with regard to employee involvement. Before the Act took effect, legislation on the European Company in the Czech Republic had only a Community dimension.
In relation to European Work Councils, legislation contained in the Labour Code (CZ0409102F), implemented by Amendment 155/2000, took effect upon the Czech Republic’s accession to the EU.
Absence from work
Throughout the period from 1990 to 2003, the development of incapacity for work was marked by a constant decline in the frequency of recorded cases at the same time as an increase in the average duration of incapacity. In 1990 there were 95.3 cases per 100 insurees, falling to 81.7 in 2003. However, the average duration of incapacity rose by 12 days in that period.
The sickness insurance system in the Czech Republic has so far been set up in a way that - according to commentators - affords considerable room for abuse, especially by employees on low wages, where sickness benefits do not constitute much of a loss compared with the wage they receive. This is thought to be the reason why there is a greater incidence of sickness in low-wage sectors (such as agriculture and textiles). High levels of sickness are also found in regions afflicted by high unemployment, where the continuation of incapacity for work prevents an employee being made redundant, or where the sickness benefit amounts to more than unemployment benefit.
An amendment of the Act on employees’ sickness insurance, Act no. 421/2003, has applied since 1 January 2004. Its aim is to reduce expenditure on sickness insurance and restrict abuses of the insurance system. The main change is the overall reduction of benefits, primarily in the first three days of sickness. A reduced year-on-year scale of incapacity for work registered by the Czech Statistical Office (Český statistický úřad, ČSÚ) in the first half of 2004 has been linked to the enacted amendment. A new Act on sickness insurance, which is currently being drawn up, is intended to bring further savings - the government is to discuss the bill in January 2005. Part of the responsibility for the system is to be transferred to employers, which will provide employees with sickness benefit for the first two weeks. At the same time, the insurance premium for sickness insurance for employers is to be reduced.
In connection with the abovementioned legislation, a debate is taking place in the Czech Republic (including in the RHSD) on the scale of cost-saving measures and the intended reform of the sickness benefit system.
Given the high rate of incapacity for work in the Czech Republic, various positive and negative wage stimuli designed to reduce the extent of incapacity for work tend to be some of the standard measures initiated by employers and incorporated into enterprise-level collective agreements, especially among manual labour occupations. However, the incidence of this is not monitored.
Psychological harassment
The issue of harassment, bullying or mobbing often tends to be treated lightly in the Czech Republic. However, public opinion research indicates that a 10th to a third of surveyed women have experienced sexual harassment in the workplace.
The state administration, the social partners and the public started to take an interest in this issue only once it became necessary to harmonise Czech labour legislation with European law. The main item of legislation here is the 'harmonisation amendment' of the Labour Code (Act no. 155/2000), which transposed EU Directives dealing with equal treatment and banning discrimination against employees. Another amendment of the Labour Code (Act no. 46/2004), which started to apply on 1 March 2004, defined sexual harassment and discrimination in the workplace and indirectly laid down an obligation for men and women to be equally represented at work.
One fundamental legislative measure is intended to provide a comprehensive treatment of what has to date been a fragmented issue. Act no. 435/2004 on employment, which includes measures on preventing discriminatory procedures (CZ0412101N) was approved by the Czech government at the end of 2004.
New forms of work
On 1 August 2004 a new employment law, Act no. 435/2004, took effect. It includes provisions on employment through temporary employment agencies, which is also covered by an amendment of the Labour Code adopted in 2004, Act no. 436/2004 (which came into force on 1 January 2005). The amendment specifies the conditions under which employees may be hired out to companies on a temporary basis. Under this legislation and in contrast to the previous legal position, only licenced employment agencies may hire out their employees to another employer.
Labour Code amendment Act no. 46/2004 is designed to prevent the repeated signing of fixed-term employment contracts with the same employee. It sets the maximum total duration of consecutive fixed-term employment contracts at two years.
All the abovementioned legislation was drawn up by the government. One of the Ministry of Labour’s goals over the coming years is to make the workforce more adaptable and the labour market more flexible by means of flexible forms and methods of work organisation, working hours and employment relations.
At the conceptual level, social policy on new forms of work organisation was defined in the Czech Republic’s National Action Plan on employment for 2004-6. The plan calls on the social partners to strive to incorporate all flexible schemes for working time permitted by law into collective agreements.
Non-standard forms of employment are not at all widely used in the Czech Republic: for some time now, employees have not been interested in anything other than full-time employment for an indefinite term. The main reasons for the low popularity of flexible forms of employment are the low level of wages they offer and the reduced job security during a time when enterprises are undergoing transformation. According to the Labour Force Survey for the second quarter of 2004, 9.7% of the total workforce is engaged in fixed-term employment and 4.9% of the workforce works part time. Most part-time workers are women (76.4%). The number of employees with a fixed-term employment contract or working part-time is rising slightly year-on-year. Other 'atypical' forms of employment are not regularly registered; information on the scale of such employment is derived from occasional sociological surveys - eg the 'Working conditions 2000 survey', which made use of the methodology of the European Foundation for the Improvement of Living and Working Conditions, stated that agency employment accounted for 0.7% of all employment, work at home 2% and computer-based work from home 1.3%.
Other relevant developments
According to Czech Statistical Office data, unemployment was 9.5% as of 31 December 2004 (the highest level of unemployment in the last six months). This should be placed in the context of the ongoing restructuring of the economy, the low flexibility of the labour and housing market and the demotivating nature of the social system. Unemployment is not falling despite the active employment measures being implemented and economic growth; on the other hand, a number of enterprises are searching for new employees and the labour market has a shortage of labour in certain skills (there is a mismatch between demand and supply for some skills and in some regions).
Outlook
From the point of view of upcoming political events, the largest government party, CSSD, faces an election for its presidency in March (the current Prime Minister Gross and the more left-wing minister for labour and social affairs Zdenek Skromach are expected to be the two candidates standing for the post).
In terms of economic developments, 4% economic growth and a slight fall in unemployment are expected.
The most important legislative event will be the expected adoption of a new Labour Code and a new Act on collective bargaining or an amendment. Both Acts should help to fundamentally liberalise the conditions for social dialogue and collective bargaining in the Czech Republic (CZ0412102F).
Parliament is expected to pass an Act on work inspection, currently being prepared (the government approved the bill on 26 May 2004). In view of the existing fragmentary nature of the concept of work inspection and the powers of control over compliance with labour law, the proposed measure is intended to regulate this area comprehensively (the intended work inspection office would take over supervision of compliance with collective agreements as well), including the issue of state supervision of work safety. As far as other measures to develop the social system are concerned, preparations for pension reform will continue. (Jaroslav Hála and Aleš Kroupa, Research Institute for Labour and Social Affairs)