Czech Republic: Role of social dialogue in industrial policies

  • Observatory: EurWORK
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  • Published on: 02 Rugsėjis 2014



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Czech right-wing government in recent years has strongly favoured a policy of austerity measures over industrial policies for growth. This has been repeatedly criticised by the social partners. Still, there are a number of tools and measures to promote economic growth, employment and export. In this context, the most comprehensive are operational programmes financially supported by the EU Structural Funds and partly funded from the state budget of the Czech Republic. The Czech social partners were active participants in the development of these operational programmes.

In addition, the Czech social partners contribute ideas and opinions to industrial policies in the framework of the standard legislative process and during tripartite meetings where they regularly present their proposals and positions. The degree of acceptance of their proposals by the government is, however, different.

Part 1: Overall role and involvement of social partners in industrial policy in the national context

Industrial policy is in this context used in its broader sense as…

those policies that have an impact on the cost, price and innovative competitiveness of industry and individual sectors, such as standardisation or innovation policies, or sectoral policies targeting e.g. the innovation performance of individual sectors.

The policy instruments are then defined as the method or mechanism used by government, political parties, business or individuals to achieve a desired effect, through legal or economic means.

Industrial policy initiatives are often undertaken unilaterally by the government but other forms may include social partners in different constellations, including:

  • bipartite initiative (a common approach by the social partners);
  • tripartite initiative (the social partners in tandem with the public authorities);
  • tripartite+ initiative (the three stakeholders in combination sometimes with other civil society players such as NGOs, research centres or qualified figures);
  • public-private partnership initiatives (one social partner and the public authorities); and
  • unilateral initiatives by a single social partner

1. Is there in your country currently a policy framework to stimulate investments that both create economic growth and employment? Tick Yes/No

Table 1

Policy framework

Yes

No

Economic growth

X

 

Employment

X

 

Both economic growth and employment

X

 

Competitiveness

X

 

2. Is there evidence in your country of involvement of social partners in the process of formulating industrial policy interventions? If yes, please indicate which types of involvement:

Table 2

Type of social partner involvement:

… in the formulation of horizontal (cross-sector) interventions

… in the formulation of vertical (sector-, industry- or company-specific) interventions

Sector-specific involvement

Yes/no: Yes, see below.

Yes/no: Yes, see below.

Cross-sector involvement

Yes/no: Yes, see below.

Yes/no: Yes, see below.

Bipartite, tripartite, tripartite+, unilateral, public/private partnership?

Please indicate which, if any, of these types apply: Yes. Any actions of industrial policies are usually discussed within the Council of Economic and Social Agreement (Rada hospodářské a sociální dohody, RHSD), platform for tripartite negotiations in the Czech Republic) where social partners regularly present their views. Social partners can also contribute their ideas to proposed measures via the standard legislative process (comments on draft laws). The degree of acceptance of their proposals is, however, different.

Please indicate which, if any, of these types apply: Yes. Any actions of industrial policies are usually discussed within the Council of Economic and Social Agreement (Rada hospodářské a sociální dohody, RHSD), platform for tripartite negotiations in the Czech Republic) where social partners regularly present their views. Social partners can also contribute their ideas to proposed measures via the standard legislative process (comments on draft laws). The degree of acceptance of their proposals is, however, different.

3. How have social partners been involved in the industrial policy formulation process?

Table 3
 

Please indicate (X) the extent to which the different types of involvement are used, including whether this involvement is statutory:

Level of government?

Sector focus?

Specific form of social partner involvement:

Statutory/mandatory

Very common/ used in most policy processes but not statutory

Fairly common but not consistently used

Rarely used

Not used at all

National or regional?

Sectoral or cross-sectoral?

Tripartite standing committee

X

       

National

Cross-sectoral

Tripartite ad hoc committees

     

X

 

Both

Both

High-level groups or other multi-stakeholder committees involving other stakeholders in addition to social partners

   

X

   

Both

Both

If multi-stakeholder committees:

Please indicate which types of other stakeholders are (typically) involved: central or local administration, NGO´s representatives, R&D sector´s representatives

Hearings

   

X

   

Both

Both

Consultations

X

       

National

Both

Conferences

   

X

   

Both

Both

Other - please specify below:

             
               

4. Is there evidence in your country of initiatives that follows recommendations and development at EU-level? If yes, please indicate in which sectors:

No. There is standard EU legislation implemented to the national law, however, there are no special initiatives, institutions or activities to follow recommendation and development at EU-level.

5. Which types of industrial policy instruments/interventions at different government levels have social partners been involved in? Please indicate degree of involvement

3 = high degree of involvement,

2 = involvement to some extent,

1 = low degree of involvement,

0 = no involvement.

Social partners´ involvement in the implementation of industrial policy measures is most evident at the national level, because at this level, social partners have the largest capacity and possibility to influence the development of industrial policies. However, the degree of acceptance depends on the government and legislators.

Table 4

Policy instruments:

National level

Regional level

Local level

Public investment programmes:

     

infrastructure

2

1

1

construction

1

1

1

building renovation

0

0

0

other

     

Innovation programmes

3

2

2

Support for R&D

3

1

1

Cluster promotion

2

2

2

Export promotion

3

2

2

Internationalisation of SMEs

2

2

2

Improvement of access to finance:

     

loan

2

1

1

loan guarantee programmes

2

1

1

venture capital funding

2

1

1

other

     

Public procurement policies

     

Tax and duty policies

2

0

0

Adapting the skills base

3

2

2

Subsidies for restructuring/ bail-out of companies in crisis

1

2

2

Social plans in case of restructuring. Training/re-training

2

2

2

Investment incentives

2

1

1

Energy efficiency/ energy shift

2

1

1

Energy supply security

2

1

1

Access to raw materials

1

1

1

Prices of energy and raw materials

2

1

1

Others, please specify below:

     
       

6. Which, if any, positive effect(s) can be related to the involvement of social partners in the industrial policy process in your country?

Table 5

Positive effects

Tick (X) where applicable

Please comment briefly: How did effect manifest itself?

Speed of policy process

   

Robustness of policy initiatives

   

Relevance of policy initiatives

X

Being involved in the process of consultation and comments, social partners can through their experience better ‘target’ proposed measures in specific areas.

Dynamism in the policy process

   

European coordination

   

Ownership of policy initiatives

   

Coherence and coordination of labour market, education, and economic policies

X

Being involved in the process of consultation and comments, social partners can through their experience better ‘target’ proposed measures in specific areas.

Stimulating public-private partnerships

X

Because social partners often present opinions on government policies publicly (i.e. in media, on their websites), they deepen to a certain extent society debates.

Others, please specify below:

X

Generally, it is difficult to quantify the effects of social partners´ involvement in the process of industrial policies. The social partners, representatives of both employers and employees, usually express their opinion on legislation and measures in the pipeline. Nevertheless, political decisions primarily affect the speed, extent, coherence etc.

.

   

7. Which, if any, problems or challenges related to involvement of social partners in the industrial policy process have been encountered in your country?

Table 6

Problems/challenges:

Tick (X) where applicable

Please comment briefly: How did the problem manifest itself?

Increased bureaucracy

   

Lengthy policy processes

X

Policy and bargaining processes in the Czech Republic are generally considered to be lengthy. This fact negatively affects involvement of social partners into the industrial policy process.

Lengthy bargaining processes

X

 

Dilution (circumvention) of parliamentary democracy

   

Problems of establishing accountability

   

Lack of dynamism in the policy process

X

Some political instability (two caretaker governments have ruled in the Czech Republic in the last five years) complicates the continuity and dynamics of political processes in general, including the collaboration between social partners and government.

Lack of culture to involve social partners

X

To some extent. Especially right-wing government´s willingness to involve social partners to into the industrial policy process was very low (in years 9/2006–7/2013 with the exeption of years 5/2009–7/2010 when the caretaker government of Prime Minister Jan Fischer improved its relationship with social partners).

Others, please specify below:

   

.

   

8. What, if anything, has been done to address these challenges/problems listed in questions 7? What was the outcome?

Table 7

Problems/challenges:

Measures undertaken

Effect positive/negative

     
     

There is no evidence that anything has been done do address the problems listed above.

Part 2: Description of relevant sector examples of social partner involvement

This section aims to identify examples of policies targeting specific sectors and involving social dialogue. Among the industrial policies treated in the previous section in question 5, please select 2-3 examples which represent significant industrial policies in your country and describe the policy instruments used and the contribution of social partners to the shaping of the policy and the outcome of their involvement.

The selection of examples should be guided by the following criteria:

  • importance of the sector to the national economy;
  • level of government support to the industry; and
  • best practice of social dialogue in the country.

Please provide references to key sources.

Example 1

Name of the instrument:

Operational Programme Enterprise and Innovation (OPEI)/Operační program Podnikání a inovace (OPPI)

Sector:

Cross-sectoral

Type of instrument applied:

(use categories from question 5. Some sector policies may apply more than one instrument

Innovation programmes: Support for R&D, Cluster promotion, Improvement of access to finance: loans guarantee programmes, adapting the skills base, Training/re-training, Energy efficiency/ energy shift.

Timing: (Period of implementation of instrument)

European Commission approved the operational programme on 3 December 2013 for the period of 2007–2013.

Operational level

National

Regional

Local

Please tick the government level and/or provide details of geographical implementation area if relevant:

X

X (except of Prague)

X

Funding:

(Please describe the size of the instrument and detail the source(s) of funding, e.g. EU, state budget, levies, stakeholder contributions, etc.).

Funding comes partly from the European Regional and Development Fund (ERDF) (85% of the total allocation) and partly from the state budget (15%) of the Czech Republic. The total budget of the programme is around EUR 3.6 billion and the Community investment through the ERDF amounts to EUR 3.04 billion.

Target group(s):

(please describe target group in terms of sector/industry, type of company, geographical criteria and/or other relevant characteristics)

Target group (type of company, sector) depends on the particular priority of the programme. In general the OPEI supports all types of companies, universities, territorial self-government regions, nonprofit organisations, subsidised state organisations and subsidised organisations of territorial self-government regions and subjects specified for individual areas of intervention, although small and medium enterprises should be prefered.

Rationale/motivation for the instrument:

(please describe the problem that the instrument should address – for instance: market failure, need to increase sector competitiveness, crisis intervention, etc.)

The global objective is to increase the competitiveness of the Czech economy and bring the innovation performance of the industry and services sectors closer to the level of leading industrial EU member states, e. g. economic growth is expected.

Policy stage

Please describe stage of involvement of the social actors i.e.

policy preparation (consultation),

policy decision (co-determination? and policy implementation (fx. by involvement in agencies)

Please see below.

Objectives of the instrument:

(please describe the objectives and any quantitative targets set for the instrument– e.g.

increased employment by X% in sector Y by 20xx

increase in sector exports by X%

increase in FDI by X%

The most important expected impacts of the OPEI are the following:

▪ The programme is expected to create around 40 000 new jobs (15,000 for women, 25,000 for men) by 2015.

▪ Gross domestic expenditures on Research and Development (R&D) in the business sector is expected to increase to 1.5 % of the GDP by 2015.

▪ The share of production in high-tech branches of manufacturing and high-tech branches of services of the business sector is expected to increase from current 7.5 % (in 2003) to 9.5 % of the GDP by 2015.

Other indicators see in OPEI.

Activities and implementation:

(Please give details on the implementation of the intervention)

The implementation of the OPEI is executed at several levels. The Managing Authority, which is Ministry of Industry and Trade of the Czech Republic (Ministerstvo průmyslu a obchodu České republiky, MPO), supervised by the Monitoring Committee, is responsible for the efficient and correct management.The Managing Authority can delegate a part of its activities or responsibilities to Intermediate bodies, which is the Investment and Business Development Agency (CzechInvest), which was established in 1992 by the MPO. The support is provided to beneficiaries who are public or private enterprises implementing individual projects and receiving public support from OPEI in particular priorities and calls.

Social partner involvement

 

Type of social partner involvement:

(Bipartite, tripartite, tripartite+, unilateral, public/private partnership? – cf. qu. 1)

Unilateral, Public/private partnership

Level of involvement of social partners involvement: European, National, regional, local, sectoral

National

Specific form of social partner involvement: (tripartite standing or ad hoc committee, high-level group, hearing, consultation, conferences, etc.? – cf. qu. 2)

high-level group, hearing, consultation, conferences

Timing and nature of social partner involvement:

(Please provide more details on the processes that social partners were involved in, their input, the timing, etc.)

For the initial stage of the preparation of the OPEI an internal MPO team for programming was established. It determined the time schedule of the preparations, defined the persons responsible etc. When concrete formulation of the OPEI began, the team was expanded, in order to ensure that the drafting of the document is of a high standard and that the partnership principle is respected. Among others, social partners were invited to express their opinions of the contents of the activities to be supported by OPEI – namely Confederation of Industry of the Czech Republic (Svaz průmyslu a dopravy České republiky, SP ČR), the Confederation of Employer and Entrepreneur Associations of the Czech Republic (Konfederace zaměstnavatelských a podnikatelských svazů, KZPS ČR), Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS) etc.

Several conferences were held to discuss the realisation of OPEI with central state administration authorities, regional authorities, economic and social partners. The first such event took place on 13 October 2005, where the first draft of OPEI for 2007–2013 was presented. Other meetings with economic and social partners were held during 2006.

Social partners and other relevant entities also expressed comments on the draft of the OPEI in two interdepartmental comment procedures held in May and October 2006, i.e. ahead of the first and final submission of the operational programmes to the Czech Government. All comments (concerning mainly of the number and focus of the priority axes and distribution of allocations for the individual priority axes) made in the above-mentioned actions and comment procedures were handled by the MPO and discussed with the parties making the comments.

Impact of social partner involvement on design and implementation of instrument:

(Please describe how/if the design and/or implementation was affected through the involvement of social partners)

Social partners are members of OPEI Monitoring Committee was established in February 2007 by a measure of the MPO on Compliance with Regulation (EC) No. 1083/2006, Laying Down General Provisions on the Structural Funds and the Cohesion Fund. Among others, OPEI MC members are representatives of SP ČR, KZPS, ČMKOS and others. Their role is to monitor implementation of the OPEI.

Other stakeholders involved, if any:

(please name stakeholders and briefly describe their roles)

Among other stakeholders involved in OPEI are Ministry for Regional Development (Ministerstvo pro místní rozvoj České republiky, MMR ČR), Czech Chamber of Commerce (Hospodářská komora ČR, HK ČR), Federation of the Food and Drink Industries of the Czech Republic (Potravinářská komora České republiky), the Government Council for Non-Governmental Non-Profit Organisations (Rada vlády pro nestátní neziskové organizace), the Council for the Cooperation of the Czech Academy of Sciences with the Business and Application Sphere (Rada pro spolupráci Akademie věd České republiky s podnikatelskou a aplikační sférou), Foundation for the Development of Civil Society (Nadace pro rozvoj občanské společnosti, NROS). Their role is similar to social partner´s role, e. g. consultation and monitoring of implementation OPEI.

Results and outcomes

 

Outputs/results:

(Please give details of the outputs/results of the intervention; e.g number of jobs created/retained, number of workers upskilled; wage increases, investment increases, increased co-operation between social partners, etc.)

Since OPEI is still running, it´s final impacts on the Czech economy are not available (OPEI has to be drawn by 2015). There are studies which evaluate the current state and quantitative outputs of some of OPEI priorities, however, the results are different for concrete priority axes.

Assessment of effectiveness:

(Please provide an assessment of the effectiveness of the intervention - were the objectives reached? If possible, base the assessment on evaluation reports or similar)

See above.

Possible explanations for the effectiveness of the instrument:

(Please provide possible explanations for the degree of effectiveness achieved, including the contribution of the social partner involvement; e.g. improved bargaining process? Increased dynamism in the policy process? Other explanations?)

Although OPEI still provides support and all the outputs will be known by 2015, it is supposed that all the financial means will be drawn and the drawing will be (in general) successful as a previous Operational Programme Industry and Enterprise (OPIE) in 2004–2006. OPEI was thoroughly prepared with using experiences of OPIE and in cooperation with social partners and other entities involved.

Assessment of efficiency:

Did the outputs/results measure up to the effort/resources invested? If possible, base the assessment on evaluation reports or similar)

There has been no such evaluation study yes.

Possible explanations for the efficiency of the instrument:

(Please provide possible explanations for the degree of efficiency, including the contribution of the social partner involvement)

Social partners have played important role of co creators in the preparation and monitoring phase of the OPEI. Above mentioned social partners were actively involved into the process and their suggestions have been implemented into the OPEI.

Example 2

Name of the instrument:

Operational Programme Research and Development for Innovation (OP R&DI)/Operační program Výzkum a vývoj pro inovace (OPVaV)

Sector:

R&D sector in general which improve the competition of business sector, educational system, support FDI etc.

Type of instrument applied:

(use categories from question 5. Some sector policies may apply more than one instrument

Support for R&D, Cluster promotion, investment into research

Timing:

(Period of implementation of instrument)

OP R&DI was approved by European commission on 25 September 2007 for the period 2007–2013.

Operational level

National

Regional

Local

Please tick the government level and/or provide details of geographical implementation area if relevant:

X

X

X

Funding:

(Please describe the size of the instrument and detail the source(s) of funding, e.g. EU, state budget, levies, stakeholder contributions, etc.).

OP R&DI is be fully financed from the public funds: 85% from the European Regional and Development Fund (ERDF) and 15% from the Czech Republic state budget. The total budget is € 2,436 095 160 (national contribution is € 365 414 276 and Community contribution is € 2,070 680 884.

Target group(s):

(please describe target group in terms of sector/industry, type of company, geographical criteria and/or other relevant characteristics)

R&D sector (e. g. R&D institutions and centres, universities, their partners from the application sphere etc.) in all regions with the exception of the Region of Prague as not eligible under the Convergence objective.

Rationale/motivation for the instrument:

(please describe the problem that the instrument should address – for instance: market failure, need to increase sector competitiveness, crisis intervention, etc.)

The global objective of the OP R&DI is to strengthen the research, development and innovation potential of the Czech Republic that shall contribute to its economic growth, competitiveness and to the creation of highly qualified workplaces.

Policy stage

Please describe stage of involvement of the social actors i.e.

policy preparation (consultation),

policy decision (co-determination? and policy implementation (fx. by involvement in agencies)

Please see below.

Objectives of the instrument:

(please describe the objectives and any quantitative targets set for the instrument– e.g.

increased employment by X% in sector Y by 20xx

increase in sector exports by X%

increase in FDI by X%

Quantitative targets are the following:

▪ Total expenditure on R&D as a share of Gross Domestic Product (GDP) should increase from 1.42% to 2.2%.

▪ The Programme should create around 2,500 new jobs in Research and Development (from which 840 for women).

▪ Increase in the number of PhD students in convergence regions from 1,000 to 1,700.

▪ The Summary Innovation Index (SII) is expected to increase from 0.26 to 0.36.

Activities and implementation:

(Please give details on the implementation of the intervention)

 

Social partner involvement

 

Type of social partner involvement:

(Bipartite, tripartite, tripartite+, unilateral, public/private partnership? – cf. qu. 1)

Unilateral, Public/private partnership

Level of involvement of social partners involvement:

European, National, regional, local

Sectoral

National

Specific form of social partner involvement:

(tripartite standing or ad hoc committee, high-level group, hearing, consultation, conferences, etc.? – cf. qu. 2)

high-level group, hearing, consultation, conferences

Timing and nature of social partner involvement:

(Please provide more details on the processes that social partners were involved in, their input, the timing, etc.)

For the initial phase, a close working team was established within the Ministry of Education Youth and Sports (Ministerstvo školství, mládeže a tělovýchovy České republiky, MŠMT) (Managing Authority). The outputs of the closer team were given to the discussion to the wider group which was created comprising representatives of the competent bodies of the public administration, economic and social partners (namely HK ČR, SP ČR etc.).

Impact of social partner involvement on design and implementation of instrument:

(Please describe how/if the design and/or implementation was affected through the involvement of social partners)

Social partners, among others, took part in creation of individual program documents, regularly discussed, commented and expressed opinion on working versions of the document, checked an approved. The comments and suggestions given by social partners and other representatives of the competent bodies of the public administration and economic partners were, to a large extent, taken into account when creating the OP R&DI. Those mainly concerned these fields: support of the undeveloped regions, interregional cooperation, networking among Czech R&D organisations, setting objectives of the priority axis and the areas of intervention, tools and the recipients of indicators. Social partners (namely representatives of SP ČR a ČMKOS) are members of OP R&DI Monitoring Committee.

Other stakeholders involved, if any:

(please name stakeholders and briefly describe their roles)

Public sector, municipalities and NGOs were also involved into the creation of OP R&DI.

Results and outcomes

 

Outputs/results:

(Please give details of the outputs/results of the intervention; e.g number of jobs created/retained, number of workers upskilled; wage increases, investment increases, increased co-operation between social partners, etc.)

Since OP R&DI is still running, it´s final impacts on the Czech economy are not available (OP R&DI has to be drawn by 2015 at the latest). There are studies which evaluate the current state and quantitative outputs of OP R&DI priorities, however, the results are different for concrete priority axes – some priorities have already meets their targets, others not.

Assessment of effectiveness:

(Please provide an assessment of the effectiveness of the intervention - were the objectives reached? If possible, base the assessment on evaluation reports or similar)

See above.

Possible explanations for the effectiveness of the instrument:

(Please provide possible explanations for the degree of effectiveness achieved, including the contribution of the social partner involvement; e.g. improved bargaining process? Increased dynamism in the policy process? Other explanations?)

See above.

Assessment of efficiency:

Did the outputs/results measure up to the effort/resources invested? If possible, base the assessment on evaluation reports or similar)

Although OP R&DI is still running and the final results will be known by 2015, its drawing is relativelly successful (in comparison with other operational programmes) and it is supposed that all the financial means will be drawn by 2015.

Possible explanations for the efficiency of the instrument:

(Please provide possible explanations for the degree of efficiency, including the contribution of the social partner involvement)

Social partners have played important role in the preparation and implementation of OP R&DI.Above mentioned social partners were actively involved into the process and their suggestions have been implemented into the OPEI.

Soňa Veverková, Research Institute for Labour and Social Affairs

COM(2010) 614 An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage. EC 2010

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