Living and working in Czechia

The government’s effort to reform public spending through the so-called consolidation package – which includes changes in value added tax (VAT) and excise duties, a 2% reduction in the wages of public sector employees, limits to tax reliefs, increased real estate tax and pension reform – was unpopular. A survey by the Public Opinion Research Centre (CVVM) found that 76% of respondents were dissatisfied with the state of public finances. Changes to the Labour Code introduced in 2023 mostly concerning ‘agreements on work performed outside an employment relationship’, which are flexible forms of supplementary earnings, were not welcomed, particularly by employers, who are worried about the flexibility of the labour market.

Although the economic conditions were not favourable in terms of gross domestic product (GDP) and inflation, the unemployment rate remained low (3.5% in November 2023). Labour market imbalances related to labour shortages persisted in 2023, although in some sectors and professions they were not as deep as in 2022.

According to the trade unions, collective bargaining took place as standard in most sectors and companies. Industrial action at company level remained stable. Higher nominal wages were agreed in most collective agreements, both at higher and company levels, although these increases in most cases have not fully compensated for the high rate of inflation. The most difficult situations during 2023 were experienced in sectors dependent on public finances (public administration, healthcare and social care, education and culture).

Trade unions criticised the government´s approach to tripartite social dialogue. According to the trade unions, the current government does not respect trade unions as partners. The government’s attitude affects the relationship between them and employers at both sectoral and company levels as, according to the trade unions, some employers have started copying the government´s ‘dismissive’ approach to trade unions. The trade unions assume that the ‘wage freeze’ in the public sector caused by the government´s restrictive policy will affect collective bargaining on wages in 2024.

To demonstrate their disagreement with the government´s economic policy, the trade unions called for ‘A day of protests for a better future’ (Den protestů za lepší budoucnost) on 27 November 2023, the largest trade union protest since 2013. The demonstration was organised by Czech-Moravian Confederation of Trade Unions, the largest peak-level trade union organisation, and was supported by the second-largest peak-level trade union organisation, the Association of Independent Trade Unions. The unions protested against the government’s consolidation package and pension reform. The largest protests occurred in education sector, where 74% of kindergartens, primary and secondary schools were closed. In many companies, work stopped for several hours, including such companies as Škoda Auto.

Czech Prime Minister Petr Fiala said that the government was prepared to continue negotiating with the trade unions but not under such pressure. Mr Fiala also insisted on the reform of public finances, so further trade union protests can be expected in 2024.