Czech Republic: Latest working life developments – Q2 2017

Continued growth in the Czech economy, staff shortages in the social services sector, the tightening of agency employment rules and legislative measures to regulate Uber 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 second quarter of 2017.

The state of the economy

The Czech economy continues to perform well and, while unemployment remains at a very low level (3.5% in the first quarter of 2017), wage levels are increasing and the year-on-year growth in consumer prices continues (grocery prices increased the most). Inflation in the second quarter of 2017 stood slightly above 2%, which corresponds with the Czech National Bank target. The favourable economic conditions are also reflected in sociological surveys, which suggest – for example – that the fear of job losses and unemployment remains at a low level.

Staff shortages in the social services sector

Social partners, including the Trade Union of the Health Service and Social Care of the Czech Republic (OSZSP) and the Association of Social Services Providers in the Czech Republic (APSS ČR), have for a long time complained about staff shortages in care for the elderly and disabled citizens. This may be affecting the range of services being provided, as there is a critical lack of qualified carers and nurses in the country. An APSS ČR survey (PDF) found that 70% of social services facilities are unable to fill vacant positions. Moreover, against the background of an ageing population, it is expected that there will be a substantial increase in the demand for these services. The main reason for the staff shortage is the low wages in care-providing professions. Direct care workers and nursing staff in both out-patient and field services are paid around two-thirds of the average national wage.

In addition to financial considerations, workers are leaving the sector because of substandard working conditions, high physical and mental demands, the low prestige of the profession and limited opportunities for further educational and professional development. Although personnel issues in the social services sector have been highlighted for the past year, and more, the government has only recently decided to adopt measures to stem the tide, increasing the salaries of social workers by 23% from July 2017. The government has also decided to provide subsidies (PDF) to regions and care providers worth a total of CZK 1.1 billion (€42.1 million as at 1 August 2017) to finance the increase.

Agency employment rules tightened

In June 2017, an amendment to Act No. 435/2004 Coll on employment was passed by the Senate, and signed on 23 June by President Miloš Zeman. At the same time, Labour Code No. 262/2006 Coll. and Act No. 251/2005 Coll on labour inspection were amended. The new legislative amendments were due to take effect from 1 August 2017. Three main changes are implemented regarding agency employment.

  • All employment agencies will be obliged to provide a financial guarantee of CZK 500,000 (€19,135); this is designed to eliminate those agencies established primarily for avoiding payment of compulsory employee contributions;
  • a licence to run an agency can be issued for an indefinite period of time (when renewed after three years);
  • a fine of up to CZK 10 million (€382,718) may be imposed for cases of disguised employment.

The amendment to the Labour Code is also significant in that it introduces sanctions for users of agency workers who do not provide comparable working conditions for agency workers and regular company workers. It also applies to situations where an agency worker is employed by the user of agency services in a basic employment relationship and, at the same time, is assigned by the agency, which makes it possible to circumvent statutory provisions on working time and overtime.

The new legislation has been welcomed by the Bohemian-Moravian Confederation of Trade Unions (ČMKOS) and larger employer confederations, including the Confederation of Industry of the Czech Republic (SP ČR) and the Czech Chamber of Commerce (HK). However, it has been criticised by the Association of Employment Agencies (APA), one of the largest players in the agency employment market, whose members consist mainly of smaller local employment agencies. The APA believes that the amendment to the legislation will not solve the problem of disguised employment and will merely serve to favour transnational employment agencies, providing them with a greater market share due to the inability of smaller agencies to provide the new financial guarantee.

Legislative measures to regulate Uber

Since April 2017, there has been a ban on providing taxi services via the Uber digital platform in Brno, the Czech Republic’s second largest city. The regional court issued an injunction after ruling that such services are in violation of Czech legislation. The injunction was issued at the request of the Lido taxi company, supported by the Brno City Municipality.

Trade unions and the main employer associations in the Czech Republic have similar opinions about Uber. ČMKOS criticised Uber mainly because of the profits it makes from work performance, without taking any responsibility for the people working (indirectly) for it. ČMKOS sees such a business as posing unfair competition for the sector. The trade unions also point out that Uber is not subject to regulations and requirements concerning the qualifications of its drivers. In addition to issues surrounding employee rights, they also point to the deterioration in consumer rights. Employers also consider this way of doing business as unfair competition.

Employers and trade unions are in favour of regulating Uber via appropriate legislative measures. The government has already commissioned an extensive study aimed at determining options on how to address issues surrounding the platform economy.

Commentary

During the third quarter of 2017, tripartite debates are expected between social partners, the government and the Ministry of Labour and Social Affairs (MoLSA) to determine the new minimum wage. MoLSA suggests a compromise proposal by raising the minimum wage to CZK 12,200 (€466.88) from 1 January 2018.

On 21 August 2017, the government and trade union representatives are expected to negotiate proposals for an increase in the salaries of state employees.

 

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