EMCC European Monitoring Centre on Change

Czech Republic: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
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  • Published on: 12 January 2012



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Soňa Veverková
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Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The self-employment support has been in existence since 1989 – at that time, it was primarily an indirect support which consisted in the self-employment friendly tax system. Until the mid-1990s, this advantageous tax system was supplemented by a relatively easy access to bank loans.

Approximately since 2005, particularly in connection with utilisation of money from the EU Structural Funds, also other forms of support have been developed for starting self-employment. These instruments were not largely affected by the financial crisis – rather than new instruments to be developed, existing instruments were extended to apply not only to the difficult CZ regions (with high unemployment rate, affected by restructuring) to all the CZ regions.

The support of setting-up entrepreneurs in CZ can be regarded as sufficient and easily accessible, a support of job creation in one-person and micro enterprises, despite it exists, is utilised by these entities only scarcely. The reason for that is primarily administrative burden of the agenda associated with employing other people and high payments of social-security and health insurance paid by the employer on behalf of his employees.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since xx? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment

X, since 1989 with new kinds of support from 2005 approx.

     
Hiring the first employee      

X

Hiring additional employees/creating additional jobs in micro enterprises

X, since 2000 approx.

     


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment

X

X

   
Hiring the first employee

X

     
Hiring additional employees/creating additional jobs in micro enterprises  

X

   

1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Explicitly: More sophisticated forms of self-employment support (consulting, business skill education, job diagnostics, etc.) appeared around the year 2005 in regions with high unemployment rate and regions affected by restructuring. In that case the instrument aims primarily at reducing high unemployment rate, when some of the unemployed are motivated to set up their own business.

Relevant documents:

Operational Programme Industry and Enterprise 2004-2006

Operational Programme Enterprise and Innovations 2007-2013

BAŠTÝŘ, I. – BRACHTL, M. – PRŮŠA, L.: The Socio-economic Status of Self-employed Persons in Czech Society, Prague: Research Institute for Labour and Social Affairs, 2009, ISBN 978-80-7416-035-6

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

Hiring the first employee
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

n.a.

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

Hiring additional employees/creating additional jobs in micro enterprises
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Implicitly: Instruments to support new job creation have been also discussed for a long time and although there exists a wide spectrum of instruments supporting job creation (regardless the employer’s size), they are, unfortunately, not often utilised by the self-employed and micro enterprises – the administrative demands and legislation associated with the other people employment is relatively complicated, not speaking of high payments of social-security and health insurance that the employer pays on behalf of his employees.

Relevant documents:

Operational Programme Industry and Enterprise 2004-2006

Operational Programme Enterprise and Innovations 2007-2013

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

The self-employment support has been in existence since 1989 – at that time, it was primarily an indirect support which consisted in the self-employment friendly tax system (the tax burden was – and still is – lower than for employees). Until the mid-1990s, the advantageous tax system was supplemented by a relatively easy access to bank loans.

Approximately since 2005, particularly in connection with utilisation of money from the EU Structural Funds, also other forms of support have been developed for starting self-employment – consulting, business skill education, financial and material support, investment incentives in return for newly created jobs, etc. These instruments were not largely affected by the financial crisis – rather than new instruments to be developed, existing instruments were extended to apply not only to the difficult CZ regions (with high unemployment rate, affected by restructuring) to all the CZ regions. In spite of that, after the year 2000 interest in self-employment has been declining.

The support of setting-up entrepreneurs in CZ can be regarded as sufficient and easily accessible, a support of job creation in one-person and micro enterprises, despite it exists, is utilised by these entities only scarcely. The reason for that is primarily administrative burden of the agenda associated with employing other people and high payments of social-security and health insurance paid by the employer on behalf of his employees.


2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

The financial crisis did not have a significant negative impact on the self-employed, or not greater than on the other economic entities within the national economy. It is probable that reforms (the tax reform in particular), which are being prepared by the right-wing government of the Prime Minister Petr Nečas (Civil democratic party, ODS), will affect the self-employed, however, as the final version of these reforms is not known yet, it is difficult to describe impact of such reforms on the self-employed and micro enterprises.

3. Representation of/lobbying for self-employed and micro enterprises


Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

Yes, explicitly by The Association of Small and Medium-Sized Enterprises and Crafts CZ (AMSP ČR, Asociace malých a středních podniků a živnostníků ČR)

Yes, implicitly by the Confederation of Industry of the Czech Republic (SP ČR, Svaz průmslu a dopravy ČR)

Yes, explicitly by The Association of Small and Medium-Sized Enterprises and Crafts CZ (AMSP ČR, Asociace malých a středních podniků a živnostníků ČR)

Yes, implicitly by the Confederation of Industry of the Czech Republic (SP ČR, Svaz průmslu a dopravy ČR)

Employees’ organisation

No

No

Not-for-profit organisations

No

No

Others

No

No

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

If a specific regional/local are is selected, please provide the following information

Name of region

 
Motivation for selecting this region

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

 

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

Table 6: List of recent instruments

Title

Social-purpose jobs/Společensky účelná pracovní místa

Aim/objective

To resolve unemployment via self-employment support.

Description of support

Social-purpose jobs are jobs established by the employer by agreement with the local labour office and taken by job applicants whose employment cannot be secured in a different way. The local labour office contributes to those jobs via a payment of four- to six-multiple of the average wage in the national economy (depending on the unemployment rate in the given region).

The measure also applies to the job applicants who will be obliged to carry out self-employment activity.

Target group

The unemployed, especially the groups in a difficult position on the labour market (people with disabilities, aged 50+, school-leavers, etc.). Open to all employers, irrespective of size, sector etc.

Initiator and other actors involved

Ministry of Labour and Social Affairs (MPSV ČR, Ministerstvo práce a sociálních věcí České republiky), local labour offices

Duration (please also indicate whether the measures has been initiated due to the recession)

The measure is described in the Employment Act no. 435/2004 Coll., as amended. It is not directly linked to the crisis.

Title

Bridging contribution/Překlenovací příspěvek.

Aim/objective

To resolve unemployment via self-employment support.

Description of support

The bridging contribution can be by agreement provided by the local labour office to the self-employed person who ceased to be a job applicant and received a contribution for creating a social-purpose job for himself/herself. The bridging contribution is granted to cover operating costs related to the start-up of self-employment.

It complements the contribution for creating a social-purpose job.

Target group

The self-employed who ceased to be job applicants

Initiator and other actors involved

Ministry of Labour and Social Affairs (MPSV ČR, Ministerstvo práce a sociálních věcí České republiky), local labour offices

Duration (please also indicate whether the measures has been initiated due to the recession)

The measure is described in the Employment Act no. 435/2004 Col. The bridging contribution was cancelled by the amendment to the Employment Act no. 382/2008 as of 1 January 2009 and re-introduced on 1 January 2011.

Title

Operational programmes supported from the EU Structural Funds/Operační programy podporované z evropských strukturálních fondů

Aim/objective

Aims differ depending on the type and focus of the operational programme.

Description of support

Money from the EU Structural Funds is intended to reduce economic and social differences among Member States and their regions. Supported activities and aims are wide-ranging; depending on particular operational programme. As far as the self-employed and micro enterprises are concerned, in the programming period 2007–2013 they can be granted a support particularly from The Human Resources and Employment operational programme (education and consulting in the field of business for start-up entrepreneurs) and operational programme Enterprise and Innovations (financial support for start-up entrepreneurs, consulting).

Target group

A wide spectrum of supported entities, such as small and medium-sized enterprises, start-up entrepreneurs.

Initiator and other actors involved

Czechinvest – Investment and Business Development Agency, Ministry of Industry and Trade of the Czech Republic (MPO ČR, Ministerstvo průmyslu aobchodu ČR)

Duration (please also indicate whether the measures has been initiated due to the recession)

The first programming period 2004–2006, now the second one is progress, i.e. 2007–2013. With regard to the fact that the operational programmes for the years 2007–2013 were designed still prior to the financial crisis, they cannot be regarded directly as a vehicle for resolving problems caused by the financial crisis, even though under operational programmes specific calls for applications are set to address topical problems of the Czech economy.

Title

Programme GUARANTEE/ZÁRUKA

Aim/objective

Guarantee for operating loans for SMEs

Description of support

The guaranteed loan must be used for acquisition of stock, including low-value tangible or intangible assets. The advantageous guarantee is provided for SMEs up to 80% of the principal of the guaranteed loan.

Target group

Small and medium-sized enterprises in the processing industry, construction industry and IT and communication sectors. On 16 November 2009 the programme was extended for wholesale and retail, tourism and education

Initiator and other actors involved

Ministry of Industry and Trade of the Czech Republic (MPO ČR, Ministerstvo průmyslu aobchodu ČR), Czech-Moravian Guarantee and Development Bank (ČMZRB, Českomoravská záruční a rozvojová banka)

Duration (please also indicate whether the measures has been initiated due to the recession)

The programme Guarantee is part of measures of the National Anti-Crisis Plan (Národní protikrizový plán, NPP), which was adopted by the CZ government on 16 February 2009. The programme promptly responds to topical needs of the SME development during the economic crisis and supplements thus resources from the Structural Funds earmarked for promoting enhancement of SMEs’ competitiveness.


2.2. In-depth description of ‘Good Practices’

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Table 7: Description of ‘Good Practice’ examples of recent support instruments

Name of the programme/instrument

ASSISTANCE – Business Step-by-Step

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

X

   

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

 

X

 

Rationale/motivation for the instrument

(please describe)

A model project was carried out in 2005–2006 and its objective was to contribute to the development of individual business and thus to help to resolve high unemployment in the Most region (affected by unemployment in the long run). Activities aimed at creating a system of consulting, educational and assistance activities to support start-up entrepreneurs (informational support of start-up entrepreneurs).

Similar projects supported from the EU structural funds have been implemented in CZ numerously, with this project illustrating a typical focus (the unemployed) and activities (consulting for business start-ups).

Purpose and aims for the instrument (please describe)

The purpose of this type of projects is to reduce unemployment rate, while some of the unemployed are encouraged to start up their own business.

Initiator
Please ‘X’    
Other stakeholders actively involved in implementation (please name them and describe their roles)

Re-training centres, educational facilities, non-profit organisations.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Projects of this type focus on the unemployed, especially those from groups disadvantaged on the labour market (school-leavers, elderly people, ethnic minorities, mothers with children, etc.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

EU program PHARE

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Project activities covered a regional analysis of the offer by consulting and educational centres for people interested in starting self-employment, development of a methodology for a training programme aiming at start-up entrepreneurs, selection of a pilot target group of job applicants motivated to set up their own business, a follow-up individual care of the self-employed. 

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Several people who took part in the project have started (and maintained) their own business. A precise number of persons cannot be identified, partly due to the fact that relevant data do not exist and partly that after the support ended beneficiaries are not monitored anymore and thus it is not clear whether they ended self-employment after the support termination, or not.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

As the interest in self-employment has been declining since 2000, it often happens in these projects that the support is provided to the unemployed who are not interested in self-employment (the aim is to fulfil project quantitative indicators).

Another frequent problem is sustainability of project activities (consulting centres, educational facilities, etc.) – after the support ends, the project implementing entity often has no resources to continue in implementing project activities, that is why these activities stop.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

Efficiency of these projects are hard to confirm, although based on opinions by the Labour Office personnel (usual project implementing bodies) interest in self-employment has been declining since 2000, which reduces efficiency of this type of projects.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

There are no studies that would map impact of projects of this type on the labour market and start-up entrepreneurs. The interviews with implementing bodies (Labour Offices) imply that not every person who took part in the project actually starts self-employment and maintains his/her position on the market, since it is very important to select relevant persons who should take part in the project (personal qualities of the individual, business spirit, education, ability to find their way though the legislation, etc.).

Therefore, significance of this type of projects consists primarily in establishing information and consulting centres for start-up entrepreneurs and individual consulting (coaching).

Please provide link to evaluation documents if possible  
Example 2:

Name of the programme/instrument

Social-purpose jobs + Bridging contribution

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

x

   

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

x

Rationale/motivation for the instrument

(please describe)

To resolve unemployment via self-employment support.

Purpose and aims for the instrument (please describe)

To resolve unemployment via self-employment financial and material support.

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)

Labour offices, unemployed people

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Unemployed people registered by local labour office.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

National resources.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Both contributions support to start new business by material and financial support.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Efficiency of these measures are hard to confirm

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome  
Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

There are evaluation studies.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

The effects of these measures on the increase of self-employment are not known. However, in 2009 3,389 people were supported. However, it helps people who are ‘unemployable’ (disabled people, young people…) and would not be able to start their own business themselves otherwise to start a business.

Please provide link to evaluation documents if possible  

Example 3:

Name of the programme/instrument

 

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

     

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

     

Rationale/motivation for the instrument

(please describe)

 
Purpose and aims for the instrument (please describe)

Initiator
Please ‘X’        
Other stakeholders actively involved in implementation (please name them and describe their roles)  
Target groups        
Please describe the target groups (sector, age, level of education, gender)  
Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)  
Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

Please provide link to evaluation documents if possible  

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

 
Additional information

Table 9: Please add any other comments to the EEO national report on self-employment:

Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

X

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