Czech Republic: Latest working life developments - Q3 2016

Significant wage increases in many sectors, positive results from public opinion surveys, amendment of the Labour Code and easier rules on employing low-qualified Ukrainian workers are the main topics of interest in this article. This country update reports on the latest developments in working life in the Czech Republic in the third quarter of 2016.

Significant wage increases reported in many sectors

The continuing recovery of the Czech economy since 2013, as demonstrated by the growth in gross domestic product (GDP), has also influenced the level of wages because employers started to offer better salaries due to of a lack of workers. According to data from the Czech Statistical Office (ČSÚ), the real average wage in the second quarter of 2016 had increased by 3.7%, compared with the same period in 2015.

The real increase of average wages in the second quarter was the highest in nine years. There are several reasons for this besides a lack of workers. The Czech-Moravian Confederation of Trade Unions (ČMKOS) says the pay rises are also due to its recent intensive campaign, The End of Cheap Labour, as well as overall better results in the process of collective bargaining. In addition, the statutory minimum wage has increased by 23% in the last three years. In January 2013, the minimum wage was CZK 8,000 (€295 as of 14 October 2016), while on 1 January 2016 it rose to CZK 9,900 (€366).

The government has also increased salaries in the public sector and further significant increases in salaries are expected. Teachers, for example, will have a pay rise in September 2017 of 8% in salary volume and 6% in tariff component. In September 2016, the government approved a 4% increase in salaries for employees working in the civil service, army, police and fire service.

The government also decided to change salary scales in order to reward and motivate key civil service employees (especially IT workers, lawyers and employees in a Medical Assessment Service). According to new rules, ‘key’ employees can have their salaries increased to double that of an appropriate salary tariff. These changes should be in force from 1 November 2016.

Developments in social dialogue and collective bargaining

There were no major changes in social dialogue and collective bargaining in this quarter. On 7 September, ČMKOS organised a mass meeting in Prague, as part of its End of Cheap Labour campaign, which was attended by nearly 1,000 trade unionists from all regions and sectors. ČMKOS is recommending that its members demand a wage increase of 5.0%–5.5% in 2017 company-level collective agreements. However, the employer organisation, the Confederation of Industry (SP ČR), said any wage increases should depend on the economic conditions of the company. In general, the pressure on wage increases in collective bargaining for 2017 looks to be very high.

Public opinion surveys reflect improvements in the labour market

The recovery of the Czech economy has also been reflected in the results of a public opinion survey (PDF) by the Centre for Public Opinion Research (CVVM). Respondents are more satisfied with the current economic performance than they were three years ago. Respondents are also more optimistic about the way the economy will develop. 

In September, the human resources consultancy and analytical company, TREXIMA, published the results of a survey of 182 companies. The survey found that nearly 70% of Czech companies intend to raise wages this year, compared with 2013 when only 35% of companies that took part in a similar survey wanted to increase their employees’ wages.

Government approves amendments to Labour Code

In late September, the government approved the amendments to the Labour Code prepared by the Ministry of Labour and Social Affairs. This is expected to lead to changes in:

  • provisions relating to an easier return to work after parental leave;
  • rules when concluding agreements on work activity (for example, giving employees the right to statutory holidays);
  • regulation of mass redundancies (an obligation to develop a social plan);
  • regulations on homeworking and teleworking.

The amendments to the Labour Code also:

  • require an employee’s consent to any reassignment;
  • provide for new regulations on senior management employees, allowing them the option of organising their working time.

The president of the Czech Chamber of Commerce continues to criticise the current draft of the act, saying that the amendments:

  • are unnecessary;
  • do not solve the real problems of the labour market;
  • do not introduce the flexibility that is needed so much;
  • increase the administrative burden for employers.

Employers helped to employ low-qualified workers from Ukraine

The government was forced to make changes to the Ukraine recruitment programme after calls from employers and problems with labour shortages (as mentioned in the second quarter country update of 2016). The new programme, which is an expansion of a preliminary project that made it easier to employ highly qualified workers coming from Ukraine, now makes it possible to employ low-qualified workers.

Postnatal paternal leave bill passes first reading

The amendment to Act No. 187/2006 regarding the introduction of one-week’s postnatal paternal leave, also mentioned in the second quarter country update, passed its first reading in Parliament on 14 September. The aim of this period of leave is to help strengthen the bond between the child and its biological father.

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