EMCC European Monitoring Centre on Change

Perceptions of globalisation: attitudes and responses in the EU — Czech Republic

  • Observatory: EMCC
  • Topic:
  • Published on: 02 March 2008



About
Country:
Czechia
Author:
Lenka Krinesova
Institution:

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

This report explores the employment impact of globalisation and reviews the attitudes and responses of national governments and the European social partners to this phenomenon in the Czech Republic.

The Government cannot fundamentally influence the decisions of independent entities on the market. The relocation issue is not part of collective bargaining.

Institutional responses to globalisation

Government action to prevent or reduce the extent of off shoring/relocation

Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?

Yes/No

If so, please give summary details and indicate the activities concerned

The cessation of production or leaving a given country is the decision made by the investor (company) based on an economic assessment of its activities. The Government cannot fundamentally influence the decisions of independent entities on the market. One example of the Governments weak influence over an investor’s decision to shut down production is the departure of the British/French company Eastern Sugar. In 2006 this company decided to shut down all its sugar processing plants in the CR. Even though sugar refining was one of the traditionally strong business sectors in the CR, the Government had no means to prevent the decision to close the plants and return the sugar production quotas to the EU. The Czech Ministry of Agriculture did at least try to negotiate higher compensation which the company should have paid out to sugar-beet growers from funds obtained from the EU for returning the quotas.

The Government’s options for changing decision to relocate or close production are similarly slim when it comes to the departure of investors who have received investment incentives from the state. The Government can demand that these incentives be returned, however only on the grounds that the investor does not fulfil all the conditions under which the incentives were granted. If an investor who has fulfilled all its obligations related to obtaining investment incentives decides to leave the country, the Government has no means available to it to make the investor change its decision. One example of this is Flextronics International (2002). Flextronics fulfilled all its obligations related to its incentives, and therefore it had no obligations to return its investment incentives as a result of closing down and leaving the country. The state therefore could not influence the company’s decision to close down production in the CR.

Social partner attitudes towards off-shoring/relocation

Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?

Yes/No

If so, please indicate the cases concerned, how the possibility has been used and whether its use has become a more frequent occurrence.

The relocation issue is not part of collective bargaining. Union action in this regard is limited to only negotiating measures to lessen the social affect on employees (e.g. the size of redundancies, assistance programmes for finding new employment etc.).

Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?

Yes/No

If so, please indicate the cases concerned and outline their main features

There are no known cases. Unions may protest against intended production re-location, but they cannot influence the owner’s decision.

Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?

Yes/No

If so, please briefly describe the cases concerned

There are no known cases. The Czech union associations normally do not participate in production re-location negotiations, or try to prevent or restrict relocation.

Government policy on foreign-owned firms controlling significant sections of the economy

Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?

Yes/No

If so, please give summary details and indicate which sectors this applies to as well as whether any distinction is made between companies according to their nationality (e.g. whether non-European companies are treated differently from European ones)

No. The Government has not adopted any measures or policies restricting the acquisition of domestic companies by foreign firms in any sector of the national economy.

Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?

Yes/No

Please indicate the sectors concerned and the stated reasons for the restrictions. Please also indicate whether the restriction apply to companies from other parts of the EU as well as from outside

No. Foreign owners are subject to the same legal obligations as Czech business entities. In this regard there is not difference between domestic and foreign capital and there is no state restriction in this regard. The state may only regulate in its position as an owner in cases of strategic investments in sensitive industries (e.g. the arms industry). The principle applies that foreign individuals may do business in the CR under the same conditions and to the same extent as Czech entities. One form of foreign entities doing business in the CR is by them having ownership interest in Czech companies. According to the provisions of the Commercial code a foreign entity may share in the establishment of a Czech legal entity, or participate as a partner or member in an already established company in order to do business. They may also set up a Czech legal entity themselves or become the sole partner in a Czech entity under certain conditions. Such legal entities are set up pursuant to Czech law and foreign individuals have the same rights and obligations and Czech individuals. The conditions for participation in and drawing of support are processed as part of individual support programmes. Support recipients are always entities which have been established pursuant to Czech law, the issue of whether the partner is a Czech or a foreign individual is not investigated.

Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?

Yes/No

If so, please indicate the sectors concerned and the nationality of the foreign companies involved as well as the reasons given for the decision

No.

Social partner responses to the take-over of domestic firms by foreign-owned ones

Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?

Yes/No

If so, please give summary details, indicating whether there is any evidence of different attitudes being shown towards European firms as opposed to companies from outside Europe

No. Czech union associations have not organised any events in relation to this issue.

Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?

Yes/No

If so, please give summary details, indicating the nationality of the company concerned and whether there is any evidence of European and non-European companies being regarded differently in this regard.

No.

Attitudes to globalisation

Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

Yes/No

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

No. Employers’ organisations as yet have not paid any special or concerted attention to this issue.

Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

Yes/No*

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

*A Eurobarometer survey on globalisation was carried out in 2003 in the EU-15 Member States. This might serve as a useful point of reference for the countries concerned, to see, for example, whether or not national attitudes expressed in the survey are in line with similar surveys which have been conducted nationally. The survey findings are available at:

http://ec.europa.eu/public_opinion/flash/FL151bGlobalisationREPORT.pdf

No. As part of their activities the unions have not systematically addresses the issue of relocation and related issues.

Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?

Yes/No

If so, please summarise the main findings of these. Please give a breakdown, where possible, in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region).

No. As far as we know no public opinion surveys concerning such aspects of globalisation have been carried out.

Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?

Yes/No

If so, please summarise the main findings of these as regards:

off-shoring (or the relocation of production abroad;

the take-over of domestic companies by foreign-owned ones and/or the growing extent of control by foreign companies of parts of the domestic economy

the establishment of new plants and offices by foreign-owned companies

Where possible, please give a breakdown in each case in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region)

No. See above.

Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by a non-EU companies?

Yes/No

If so, please give summary details of the differences in response to EU integration as opposed to globalisation.

No. See above.

Lenka Krinesova, Research Institute for Labour and Social Affairs

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