Czech Republic: Annual Review 2011

  • Observatory: EurWORK
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  • Published on: 28 Listopad 2012



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As to political and economic developments, the year of 2011 was a time of intense government reform efforts. The Cabinet having majority of 118 votes out of 200 MPs in the Chamber of Deputies of the Czech Parliament succeeded in pushing through most of the planned reforms.

1. Political and economic developments

Please give very brief details of:

  • The government (s) in office during 2011

The acting government was a coalition cabinet of Petr Nečas, appointed in July 2010. The coalition, being of the central-right nature, consists of the Civic Democratic Party (Občanská demokratická strana, ODS), TOP 09 and Public Affairs (Věci veřejné, VV). In terms of staffing, the cabinet was relatively unstable, until the end of 2011 six ministers were one by one replaced. In addition to that, in April 2011 the government survived the vote of no-confidence by the Chamber of Deputies (Lower House) of the Czech Parliament.

  • Any general or significant regional/local elections held in 2011

In March 2011 the by-election to the Senate (Senát Parlamentu České republiky, SP ČR) took place in one constituency.

  • Any other significant political events which took place in 2011

In December 2011 the Chamber of Deputies of the Czech Parliament (Poslanecká sněmovna Parlamentu České republiky, PSP ČR) adopted an amendment to the Czech constitution that allows citizens to elect the Czech president directly.

  • Any forthcoming national or important regional/local elections or significant political events

In summer a presidential campaign will be launched; in autumn regional elections and by-elections to the Senate will be held.

  • Any major economic developments which are likely to impact upon employment and industrial relations.

According to the preliminary estimate by the Czech Statistical Office (Český statistický úřad, ČSÚ), the 2011 economy grew by 1.7% on the year-on-year basis. In the fourth quarter the gross domestic product (GDP) rose by 0.5% year-on-year, however, due to the results of the third quarter it fell by 0.3%. In technical terms, Czech Republic got into recession. The powerhouse of the economy throughout the year was in the processing industry. Steady above-average results were reported for the transportation and warehousing sector; on the contrary, the economic performance of the building industry plummeted.

If a new government took office during the year, briefly summarise the implications for policy on employment and industrial relations.

2. Legislative developments

Please give brief details of important legislative developments with implications for industrial relations and working conditions, where these are not covered in other sections of your response. For example, this might include new or amended legislation on issues such as employment rights, working time, pay and conditions of employment, termination of contract, equality, social security (with implications for the employment relationship), training, new forms of work, the labour market, health and safety etc.

In November 2011 a wide-ranging amendment to the Labour Code was adopted, with effect from 1 January 2012 (CZ1201019I), from which the government expects enhanced flexibility of labour-law relations and improved motivation of employers to create new jobs. It introduces, for example, a possibility for the employer to dismiss an employee that missuses sickness benefits, tightening of conditions for operation of trade unions at work (newly a trade union may operate in a company only if at least three of its members are employed by the company) etc. Employers have welcomed the amendment univocally, whereas trade unions criticise it.

The Chamber of Deputies adopted an amendment to the Employment Act that introduces, with the effect from 1 January 2012, a new definition of illegal work, including also a performance of bogus self-employment, locally called ‘Schwarz system’ (CZ1201029I) (it is a utilisation of work done by people who officially act as the self-employed even though the real relation between them and the company show signs of gainful employment, corresponding thus to a labour-law relation). In addition, the amendment tightens sanctions for illegal work, extends re-training options, etc.

Changes to the Employment Act are part of a wide, ‘social’ government reform drawn up by the Czech Ministry of Labour and Social Affairs (Ministerstvo práce a sociálních věcí České republiky, MPSV ČR), that changes, with the effect from 1 January 2012, the entire system of social benefits, introduces social cards for their payment (they may also be used as an identity card for people with disabilities) and tightens the rules for payment of unemployment benefits. At the same time, it unites the location and administration (when benefits, allowances and promotion funds will be paid newly by the public employment services only, particularly with the aim to increase efficiency of the control over the utilisation of state funds).

The coalition also managed to push the pension reform through the Chamber of Deputies (Act on Pension Savings and Act on Supplementary Pension Savings were adopted in November 2011), mostly with the effect from 2013. The reform introduces a voluntary saving in private pension funds and simultaneously changes the current system of supplementary pension insurance with a state contribution. The system of gradual extension of the retirement age beyond the current upmost limit of 65 years (no upper limit has been determined for the gradual increase of the age necessary to become entitled for the old-age pension, the retirement age extends by two month for each age group) has been launched already at the turn of September and October 2011 as part of the ‘small pension reform’. The pension reform as a whole gave rise to criticism by part of professional and general public as well as protests by trade unions.

3. Organisation and role of the social partners

Please provide brief details of any major changes in the organisation and role of the social partners in your country during 2011. This might include trade union or employers’ organisation mergers, changes to social dialogue structures, or changes in membership levels and representativeness.

The Independent Trade Union of the Czech Police (Nezávislý odborový svaz Policie ČR, NOS PČR) terminated its membership in the Czech biggest peak union organisation, Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS) as of 31 December 2011. The reasons for that, according to the Union’s declaration, were economic and organizational. At the same time, it expressed willingness for wider trade union cooperation in the future. Based on its own data, the Union has currently approx. 6,000 members and an exceptional position among Czech trade unions as its membership has been growing recently. According to the information by the Union the increase was boosted primarily by a protest campaign of policemen and fire-fighters conducted by NOS PČR against the Czech Minister of Interior Radek John, which, among other circumstances, resulted in the dismissal of the minister from his office in April 2011 (CZ1102039I).

4. Developments in collective bargaining and social dialogue

Please give details of the number of collective agreements negotiated in 2011 by level (eg. national, sectoral, company), compared with numbers of agreements negotiated in 2010. Outline any trends/shifts between levels of bargaining, or changes in bargaining coverage.

According to the trade unions associated with ČMKOS, 4,904 company-level collective agreements (CLCAs) were concluded (4,812 in 2010), applying to 1,352,970 employees (1,479,780 in 2010), which represents roughly 34% of all employees in the Czech Republic (36.8% in 2010). According to the ČMKOS data (which represent a majority sample), 12 out of a total of 32 trade unions associated in CMKOS concluded a total of 18 higher-level collective agreements (HLCAs) (18 in 2010) that covered approximately 3,400 employers (5,160 in 2010) and 347,960 employees (531,700 in 2010). The process of expanding the scope of collective agreements to include other employers continued in 2011 as well. Therefore, these HLCAs apply to 7,980 employers (9,990 in 2010) and protect about 567,960 employees (816,390 in 2010), which represents about 14% of all employees (20% in 2010).

  • To what extent are there derogations from collective agreements? Describe any trends in terms of derogations.

This topic is not monitored in the Czech Republic. The Act no. 262/2006, Labour Code, in Article 27, par. 1 prescribes that a CLCA must not regulate rights from labour-law relations in a lesser extent than the HLCA does, otherwise it is invalid in those provisions.

  • If there have been any major bipartite or tripartite initiatives at national level, please provide details. (Do not include initiatives which deal specifically with the economic situation as these should be covered in question 5)

In June 2011 members of the Confederation of Industry (Svaz průmyslu a dopravy ČR, SP ČR) and ČMKOS agreed on a common declaration promoting introduction of ‘kurzarbeit’ (CZ1110019I). They also appealed to the government to prepare an analysis for a speedy implementation of this institute. In October 2011 the ‘kurzarbeit’ introduction was discussed by the government and social partners in Council for Economic and Social Cooperation (Rada hospodářské a sociální dohody, RHSD).

  • Other conditions of employment (these might include training and skills, job security, occupational pensions, equal opportunities and diversity issues)

According to the Information System on Working Conditions (Informační systém o pracovních podmínkách, ISPP), a contributing to the supplementary pension insurance was agreed in 58.8% of CLCAs in 2011(in 57.5% of CLCAs in 2010). Conditions for employee development were agreed in 32.1% of CLCAs in 2011, specific training programmes with quantification of participants were, however, included only in 1.7% of CLCAs (a significant year-on-year change did not occur in this field). In 2011 detailed conditions of equal treatment and ban on discrimination were agreed in 30.7% of CLCAs (a year-on-year increase by almost 2%).

Information on developments in pay and working time in the course of 2011 is being collected in the Annual Updates on working time and pay, and therefore does not need to be reported here.

5. Responses to the economic situation (200 words)

With regard to the current economic situation, please give brief details of:

  • cross-sectoral and sectoral level initiatives, the responses of the social partners in your country, with a focus on any bipartite or tripartite initiatives to tackle any economic problems;

The government responded to the growing deficit of the state budget by already-mentioned cost-reducing reform measures, including a reform of the Czech pension, which also includes a gradual extension of the retirement age beyond the current age limit.In the context of this government pension reform, social partners have developed a supplementary initiative in the second half of 2011, which has been accepted by the government. The original concept by social partners consisted in a proposal to introduce early retirement for employees in demanding occupations. However, it has been expanded to each and every retiring employee (this has been taken into account in upcoming amendments of laws with expected effect from 2013). Five years before the retirement age, employees will be allowed to apply for the ‘early old-age pension’ if the employee has sufficient funds for this purpose generated in the supplementary pension saving from employer’s contributions. In terms of taxes, these contributions will be regarded employers’ costs and for employees they will be exempt from the income tax within a certain total limit per year.

  • government responses to the economic situation with an impact on industrial relations and on labour law;

When looking for savings in public resources, the government focused on the implementation of the above-mentioned reforms and legislative initiatives (including the already-mentioned vast amendment to the Labour Code).

  • and any significant effects of the economic situation on the industrial relations system.

In mid-June 2011 a strike of employees in the transport sector took place, aiming against the government economic and social policy (see below). The strike, with regard to its significance being larger than most of similar actions in previous years, became an immediate impulse for the government decision to start preparation of a law governing strike activities in a comprehensive way. The proposed bill should be discussed by the government in March 2012.

If initiatives have been reported in an earlier Annual Review, please provide an update.

6 Developments in working conditions (550 words)

Please report the most important developments in the field of working conditions and quality of work and employment during 2011 in your country. The following topics should be taken into consideration:

Results of the Labour Force Survey (LFS) show that in the 4 quarter of 2011 the total unemployment decreased by 3,300 people on the year-on-year basis, the employment rate of population at the age of 15–64 amounted to 66.1%, growing by 0.6 percentage point on the year-on-year basis. The employment rate of men grew by 0.3 p.p. to 74.3%, the employment rate of women grew by 0.9 p.p. to 57.7%. The number of the unemployed showed a year-on-year decline by 25,100 people and the number of the long-term unemployed by 15,900 people. In 2011 the general unemployment rate averaged 6.7% (i.e. a year-on-year decline by 0.6 p.p.) – http://www.czso.cz/csu/csu.nsf/informace/czam020312.doc)

According to data by the MPSV ČR, a year-on-year increase of the average gross monthly nominal wage in quarters 1 to 3 of 2011 representing by 2.2%. The average real wage showed a year-on-year growth by 0.4% (http://www.mpsv.cz/files/clanky/12148/text.pdf).

  • health and well-being of workers – including health problems, risk exposure, impact of changes in work organisation, and violence, harassment and discriminations;

In 2011 the Czech Social Security Administration (Česká správa sociálního zabezpečení, ČSSZ) recorded a year-on-year increase in ended temporary incapacity for work by 4,047 (0.3%) cases. On the contrary, a decline was shown in the number of days of incapacity for work, namely by 3.6%, and the average duration of temporary incapacity for work reduced (in 2011 it amounted to 44.8 days, i.e. by 1.7 day less than in 2010 – http://www.cssz.cz/cz/o-cssz/informace/media/tiskove-zpravy/tiskove-zpravy-2012/pracovni-neschopnosti-oproti-lonsku-vice-ale-mene-prostonanych-dnu).

Calculations by the ČSÚ imply that 6.4% of the total number of employees were carrying out dangerous work as at 30 June 2011, while one third of this number accounted for women and two thirds for men. There were 59 occupational fatalities in the first quarter of 2011 (of this number 4 were occupational fatalities of women – http://www.czso.cz/csu/2011edicniplan.nsf/p/3305-11, http://www.suip.cz/_files/suip-d9ade57b25dcd405c7555fbf3309569e/tisk_zprava_12_11.pdf)

Based on research surveys conducted in 2011, one fifth of workers encountered some form of mobbing at work (CZ1111019I). In 2011 85% of citizens expressed the opinion that some groups of people in the Czech Republic are discriminated at work (especially in relation to age, state of health and family status – http://stem.cz/clanek/2187, CZ1202029I).

  • developing skills and competences – including qualifications, skills and competences, career prospects and training opportunities

In May 2011 the MPSV ČR has launched a project titled ‘Study for Your Growth!’ financed from the Operational Programme of Human Resources and Employment (Operační program Lidské zdroje a zaměstnanost, OP LZZ). It is intended for employers who managed to overcome the economic recession and have a potential for development and prosperity. Application for support can be filed by employers in the engineering industry, construction, retail, restaurants and gastronomy, field social services and waste management. Funds are earmarked for reimbursement of training activities or as wage compensation for employees sent to a training course http://www.mpsv.cz/files/clanky/6542/17032009.pdf, CZ1203019Q).

In 2011, Further Education Fund (Fond dalšího vzdělávání, FDV), an organisation established by the MPSV ČR, prepared a project ‘Placements at Companies – Learning through Practice’, the main objective of which is the implementation of an innovative system of further education via employees’ placements at companies. Funding is secured from the European Social Fund via the Operational Programme Education for Competitiveness (Operační program Vzdělávání pro konkurenceschopnost, OP VK) and from the funds of the Czech state budget http://www.fonddv.cz/pages/projekt-staze-ve-firmach---vzdelavani-praxi.php).

  • work-life balance – including issues such as working time, time management at work and social infrastructures.

According to LFS data, in the second quarter of 2011 the part-time working in the Czech Republic accounted for mere 4.7% of all people with one or main employment (part-time working men accounted for 1.8%, women for 8.6% http://www.czso.cz/csu/csu.nsf/informace/czam110411_analyza11.doc).

The most frequent type of flexible work load in the Czech Republic is, according to a research carried out in 2011 by LMC and Factum Invenio) employment with flexible working hours.

For answering this question, please make use of all national sources of data on working conditions such as national surveys, quantitative and qualitative research and administrative reports (for example, from the labour inspectorate or health and safety authorities). Please report also on policies, programmes or initiatives implemented at national and regional/local levels by public institutions and social partners. Please make sure you are not reporting the information already provided in question 2.

7. Industrial action (200 words)

Please give brief details of strikes and other industrial action during 2011, including:

  • statistics on the number of strikes, workers involved and working days lost (absolute number and per 1,000 workers) for as much of 2011 as is available (please indicate briefly what types of action are or are not included in these figures – e. g. are only strikes with a minimum number of workers or days lost included, or is only “official” action included?), and how this compares with previous years; and

Industrial action has not been centrally monitored since the mid 1990s. According to trade union data (for CMKOS only), a dispute was resolved through a mediator during the negotiation of HLCA in one case in 2011 (as in 2010) and during the negotiation of an CLCA in 4 cases (3 in 2010). No dispute was resolved before an arbiter during the negotiation of HLCAs (as in 2010) and of CLCAs (as in 2010). A strike alert during the negotiation of an HLCA was not announced in 2011 (1 case in 2010). In case of CLCA there were 2 strike alerts announced during the negotiation (6 in 2010). No strike took place during the negotiation of an HLCA or CLCA in either 2011 or 2010.

  • any particularly large or significant strikes/lockouts or other disputes;

The strike of transportation employees in June 2011 (CZ1106019I) (carried out outside the collective bargaining process) was a culmination of public protests by trade unions against government economic reforms. It completely affected both passenger and cargo railway transport, the underground transport in Prague entirely stopped and the operation of municipal public transport in Prague, Ústí nad Labem, Brno and in some other cities was substantially reduced. The strike, which was supported, according to public polls, by over one half of population, exceeded in its significance most of the previous similar actions and became an immediate impulse for preparation of government law governing strike activities in a comprehensive way. The bill is planned to be discussed by the government in March 2012.

In December 2011 a two-day protest of pilots of Czech Airline Pilot Association (České sdružení dopravních pilotů ČSA, CZALPA) from Czech Airlines (ČSA) took place (CZ1112019I) (also outside the collective bargaining process), who disagreed with the company restructuring, particularly with a transfer of a substantial number of aircrafts from the fleet of this national air carrier. For this purpose, they used a special form of strike – many pilots did not come to work referring to their health as being currently indisposed. Dozens of flights had to be cancelled due to the strike, however, the airlines managed to rebook hundreds of passengers to flights of other carriers.

8. Restructuring

Please give brief details of major and significant incidences of company restructuring and workforce reductions in 2011 and how they were dealt with, especially where these led to important industrial disputes or collective agreements, or had other notable industrial relations implications.

The restructuring process continued in the national airlines ČSA. Unlike in previous restructuring plans that were primarily based on cost reduction, the company prevailing concept in 2011 consisted in streamlining the transportation network and reduction in the number of operated lines. This decision together with the announced sale of aircrafts and dismissals of pilots resulted in the above-mentioned protests in December 2011.

The metallurgical company ArcelorMittal Ostrava (AMO) announced its plan in December 2011 to dismiss 600 employees (i.e. approx. 10% of staff), due to the crisis in the steel industry. Employees are dismissed based on an offer of a voluntary leave with a severance pay amounting to 11–24 pays depending on the number of years with the company.

9. Other relevant developments

If there been any other significant developments affecting employment relations in 2011 that have not been mentioned above, please give brief details.

The recorded unemployment rate in December 2011 according to statistics by the MPSV ČR amounted to 8.6%. (ČSÚ uses the definition of unemployment by ILO, whereas the recorded unemployment rate reported by the MPSV ČR is calculated as a fraction with the number of immediately available, jobless job applicants in the numerator and a sum of the employed, the number of working foreigners and the number of immediately available, jobless job applicants in the denominator) . The total number of job applicants was 508,450 people.

Jaroslav Hála, Štěpánka Pfeiferová, Research Institute for Labour and Social Affairs

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