Czechia: Latest developments in working life Q2 2019

The outcome of negotiations between social partners on an amendment to the Labour Code, tripartite negotiations on increasing salaries in the public sector in 2020 and the impact of the digital transformation on Czechia are the main topics of interest in this article. This country update reports on the latest developments in working life in Czechia in the second quarter of 2019.

Draft amendment to Labour Code submitted to government

Following six months of negotiations, the Ministry of Labour and Social Affairs agreed with trade unions and employer organisations on a compromise concerning an amendment to the Labour Code. The new draft legislation contains substantially fewer changes than the original, which was drafted in August 2018, and no longer includes a plan to increase the minimum wage according to the average wage growth in the economy. ^[1] The social partners also disagreed about the introduction of dismissal without providing a reason and a change concerning severance pay.

The compromise between the state, trade unions and employer organisations has yet to be confirmed by a government coalition agreement, according to which politicians will aim to ensure that the agreed proposal does not change during the course of the legislative process.

The Confederation of Industry of the Czech Republic (SP ČR) said that the proposed amendment will be a compromise that contains the maximum number of changes that are reasonably possible. ^[2] The amendment includes several items that will be welcomed by employers: for example, holiday entitlement will now be calculated by the number of hours instead of days worked. The amendment also recognises job sharing as a response to the demand for increased flexibility in companies. This type of work arrangement is targeted at employees who work shorter working hours, but are responsible for a full-time workload. Such employees will be able to agree among themselves and schedule their working hours so that they share one job position.

A new regulation on the delivery of notifications to employees will make it easier to notify workers about employment-related matters (such as dismissal) by post. Concerning the requirement to provide a certificate of employment for former employees upon termination of their contract, this obligation will now apply only to those employees who participate in the sickness insurance scheme, i.e. those whose remuneration exceeds CZK 10,000 per month (€391 as at 23 July 2019). Employer organisations also welcomed the introduction of new preventive health and safety programmes.

Mixed views on salary increase in the public sector in 2020

A meeting of the Council of Economic and Social Agreement of the Czech Republic (RSHD ČR), held on 27 May 2019, discussed the topic of an increase in the salaries of civil servants. Minister of Finance Alena Schillerová proposed a 2% increase in public service pay for 2020, with teachers being awarded a salary increase of 10%.

Jaroslav Hanák, President of SP ČR, stated that employer organisations supported the government’s proposal. However, Josef Středula, Chairman of the Czech and Moravian Confederation of Trade Unions (ČMKOS), opposed it. The trade unions are demanding a 15% salary increase for teachers, a 10% increase for non-teaching staff and health service workers, and an 8% increase for other employees. Finance Minister Schillerová stated that it was not possible to accept the proposal of the trade unions and argued that the parties should make an agreement based on the actual growth of the Czech economy. According to Jaroslav Hanák, other state and public administration employees should receive salary increases of a maximum of 2% as the Czech economy cannot afford to award higher salary increases. He also stated that public sector wages cannot ‘dramatically outpace’ those paid in the private sector.^[3]

At a subsequent tripartite meeting on 10 June, the government and the social partners agreed that the salaries of teachers in the regional school system would increase by 10% and that of non-teaching staff by 7% in 2020. A further 9% salary increase for teachers is expected for 2021. At the end of 2021, teachers will earn over CZK 45,000 (€1,740) on average, a commitment that was set out in the government’s policy statement. The issue of salary increases for other categories of civil servants and state employees remains unresolved, and will be discussed no earlier than in September 2019.

• Office of the Government of the Czech Republic: Tripartita jednala o návrhu státního rozpočtu na r. 2020

OECD warns of threat to industry due to automation

A new report from the Organisation for Economic Cooperation and Development (OECD) – OECD Skills Outlook 2019: Thriving in a digital world – analyses the situation of all OECD countries in the area of digital transformation. ^[4] While this social and economic transformation provides new opportunities for many countries, the report emphasises that it presents a considerable risk for others (including Czechia) and warns of the risk of increasing global inequality. New technologies, large-scale digitalisation and the increased availability of information will inevitably transform the labour market. According to the report, industrial automation poses a bigger threat to Czechia than it does to other member countries.

Scandinavian countries and the Benelux countries are best prepared for digital transformation, according to the report, while Greece, Italy, Lithuania and Slovakia are least well prepared. Czechia is the country most vulnerable to automation across the full range of industrial sectors. ^[5] The report goes on to predict that up to 6% of Czech employees will be forced to change their professions in the near future, particularly in the energy, mining, construction and agricultural sectors. Three basic skills are mentioned as being essential in terms of employment in the new labour market: effective use of the internet, a high level of language and numerical literacy, and a high level of media and internet literacy.

Minimum wage discussions kick off

Discussions on increasing the minimum wage in 2020 commenced in Q2 2019. According to ČMKOS, the minimum wage should be increased to CZK 15,000 (€587) in 2020, while employer organisations represented by SP ČR are prepared to agree to an increase of just 5%, i.e. to around CZK 14,000 (€548). The opinion of the Ministry of Labour and Social Affairs is close to that of ČMKOS.