CZECH REP.

Electoral registration procedures are fair and transparent. In order to found a party, three citizens aged 18 or over need to submit the party statutes, backed by 1,000 signatures. The 1991 law on political parties and movements sets down conditions that exclude parties that lack democratically elected organs, break the law, aim to remove the democratic foundations of the state or to take power for themselves, restrict the freedom of other parties, or threaten morality and public order. In the period under review, the most controversial issue was the attempt by successive governments in 2008 and 2009 to ban the Workers’ Party (Dělnická strana), a far-right organization that claimed to have almost 1,000 members and received over 1% of the votes in the 2009 European Parliament elections. The case was rejected by the Supreme Administrative Court on March 4, 2009, on the grounds that a serious threat had not been demonstrated. The government tried again after the necessary six-month delay and received a favorable Supreme Administrative Court judgment on February 17, 2010. The Workers’ Party then appealed to the Constitutional Court on March 15, thereby delaying implementation of its dissolution.

Electoral law guarantees parties access to state radio and television with 14 hours set aside for all parties to express their views, with equal allocation to all irrespective of their size or previous voting performance. Thus all parties do have access, although the resulting presentation is often tedious and unlikely to hold viewers’ and listeners’ attention. Space is also provided by municipalities for billboards, and political advertisements are carried in newspapers. There is an obvious bias toward more coverage and presentation for larger parties, reflecting their greater resources and also the perception of the media that they are more important. However, television and radio debates often include all parties that already have or are likely to gain parliamentary representation, for which 5% of the vote is required. Smaller parties receive much less coverage, unless they can attract attention through the presence of established politicians or media personalities.

All adult citizens, including convicted prisoners, can participate in national elections, and voter registration is relatively straightforward. However, while special provisions for a mobile ballot box facilitate voting for the disabled and seriously ill, there is no general ability to vote by mail. Czech citizens residing abroad can vote at Czech embassies and consulates. For them, the participation in elections is complicated by a special deadline for registration and the declining number of embassies and consulates.

The financing of parties is regulated by the state. A major, and indeed often the main source of income of the Czech parliamentary political parties is various forms of state contribution. This follows a precise formula which benefits the larger parties while severely penalizing those with the smallest share of the votes. A small new party stands little chance without wealthy backers. The private funding of parties is subject to a number of legal restrictions. Parties are prohibited from accepting money from state-owned enterprises or foreign donors. All donations above €2,000 (CZK 50,000) have to take place via bank transfer and make use of a so-called donation voucher. Parties are obliged to publish information about donors and donations in audited annual reports that to be made publically available in the library of the parliament. The funding of political parties is supervised by the fiscal and tax authorities and overseen by parliament. Although these rules appear strict, they are not as rigid as some in western Europe. For instance, there is no requirement for a special bank account for financing an election campaign, nor is there any upper limit to election spending. Larger parties can take bank loans to fund their electoral campaign, or establish companies which then provide such loans. There have been many media reports on how control of party funding can be circumvented, along with less frequent threats of legal action.

The Czech Republic has traditionally been characterized by a high degree of media freedom. Formal restrictions on the free expression of opinion have been limited, public and private media have been largely independent from the government, and the press law has been liberal. Concerns about the freedom of the media have been raised by the so-called muzzle law that came into effect on April 1, 2009, passed by parliament with little opposition apart from the Communists. This measure established penalties of up to five years in prison for publishing the names of crime victims without their permission or for publishing any account drawn from police wiretaps in newspapers or on the Internet, TV or radio. A number of newspapers and journalists’ organizations criticized this as a serious infringement on press freedom. The background to the first part of the law was the treatment of various child victims of crime. The second part was a reaction to a series of cases in which police investigations had found their way into the media, leaked by police officers, which served to compromise certain politicians. In some cases these helped expose corruption, as police investigations of this type were often mysteriously dropped before coming to court. Passing the law could be justified as an indirect means of enforcing discipline in the police force, but the effect was also to protect corrupt politicians.

Media ownership in the Czech Republic has been relatively concentrated. However, at least in the case of television, the digitalization of broadcasting, which started in 2005 but gained momentum only in 2008, has reshaped the media landscape and increased media pluralism. The number of nationwide private TV stations has risen from two to six (as of April 2010), and there are now approximately 50 regional TV broadcasters as well. Within the Czech print media, foreign ownership is strong, but has no visible influence on the ideological tone of media output. At the end of 2008, the German Handelsblatt group sold Economia, the biggest Czech publishing house (which inter alia publishes the leading daily Hospodářské Noviny), to a Czech media company. This transaction was preceded by fears that Economia could be bought by a dubious investor with Russian connections.

The Czech constitution and the 1999 Law on Free Access to Information, substantially amended in 2006, provide for far-reaching access to government information. Public bodies have gradually learned what can and cannot be kept secret. The president’s office initially refused to provide any information, but from 2008 it complied with the law and published details on its website explaining how to seek information and what prices will be charged. In 2009, it received 27 requests, none of which were refused. There are still difficulties with many municipalities, but they too can be taken to court if they refuse to respond to requests for information. Some smaller municipalities have been confronted with serious financial difficulties following failure to disclose information as requested. Journalists have been making use of the freedom of information law to follow possible cases of government-level corruption associated with major arms contracts, but have been refused information detailing fees received by private companies and on individuals who may have been responsible for signing deals. The increasing number and quality of electronic portals for public administration has further improved the access to government information.
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The government and the administration in the Czech Republic respect and protect basic civil rights. As the complaints lodged with the European Court of Human Rights and the Office of the Public Defender of Rights (Ombudsman) indicate, the main problem is the length of legal proceedings. The high number of complaints first of all shows that Czech citizens are increasingly aware of their civil rights.

Political liberties are well codified and respected, and are protected by the state. However, there are some restrictions on the registration of parties and on free speech. The 1991 law on political parties and movements forbids the establishment of parties that lack democratically elected organs, break the law, aim to remove the democratic foundations of the state or to take power for themselves, restrict the freedom of other parties, or threaten morality and public order. These provisions were invoked by successive governments in 2008 and 2009 to ban the Workers’ Party (Dělnická strana), a far-right organization that received over 1% of the votes in the European Parliament elections of 2009. An amendment to the penal code in November 2008 introduced penalties for denying the crimes against humanity that took place under fascism and communism.

The Mirek Topolánek and Jan Fischer governments launched a number of anti-discrimination measures. The Topolánek government established a new cabinet portfolio, a minister for human rights and minorities, in charge of better coordinating the activity of advisory boards, authorities and NGOs dealing with human rights, national and ethnic minorities, in particular the Roma minority. The new ministry helped to put issues of discrimination on the agenda, but often lacked support from other parts of government. The effects of the new anti-discrimination law, which ultimately took effect in September 2009 following strong EU pressure, have also been limited. As finally approved, the law covers employment, housing and other spheres. It outlaws discrimination on grounds of sex, race, nationality, sexual orientation, age, disability and religion, but not political views. It specifies how an individual can complain, but there is no obligation for employers or public bodies to monitor their own practices to eliminate discrimination. As the law met with strong opposition, it is clear that part of Czech society is either unaware of discrimination or is comfortable with what exists. It therefore remains an open question to what extent this relatively weak measure will help in overcoming the prevailing discrimination, most notably against women and Roma.

Executive actions are generally predictable and undertaken in accordance with the law. Problems arise because of the incompleteness or ambiguity of some laws with general declarations, notably the Charter of Fundamental Rights and Freedoms, requiring backing from detailed specific laws. However, points are gradually being clarified as case law builds up, as in the areas of freedom of information and discrimination. Government bodies then learn to comply with an established practice. An important example is the right to strike, which is referred to only as a fundamental right and in the context of collective bargaining law. For some time, government official tried to declare strikes that were not connected with collective bargaining illegal. However, no such issue was raised when trade unions in transport prepared to stage a strike in March 2010 against changes that would have taxed benefits in kind they were receiving from employers.

The Czech courts have generally operated independently of the executive. The most active control on executive actions is the Constitutional Court, which has triggered annoyance with its judgments across much of the political spectrum. Its decisions often come only after close votes and some have been surprising. It has been accused both of political bias and of setting itself up as a third chamber of parliament with a power of veto. In the period under review, the court’s most controversial decisions included its rejection of early elections in September 2009 and its judgment on the Lisbon Treaty in November 2008, in which it rejected President Klaus’s view that signing the treaty would be in conflict with the Czech constitution. Major questions over the objectivity and independence of the judiciary were raised by the fate of long-standing accusations of corruption against Jiří Čunek, the Christian Democrat deputy prime minister in the Topolánek government from April 2008 to January 2009. He was accused of accepting a bribe in February 2007, but continued in office while the prosecutor was changed to one who was willing to drop the charges. Although nothing was proven, there was evidence of possible direct political links, and dropping the charges was very helpful for the government in maintaining its narrow parliamentary majority. The issue remained under media scrutiny into 2010, as various courts considered whether it had been acceptable to change prosecutors. The implication is of a legal system that is partially politicized, with judges making decisions on the basis of political opinions and in the interests of political allies. Other cases show evidence that judges tempted by personal gain have offered a shield to corruption. All of this is under some control from other parts of the legal system, however.

The justices of the Constitutional Court, the Supreme Court and the Supreme Administrative Court are appointed by the Senate, the second chamber of the Czech parliament, on the basis of proposals made by the president. Within the Senate, no special majority requirement applies. During the presidency of Václav Klaus (first elected in 2003, currently serving a second term), there have been disputes over appointments, with the Senate refusing to approve four candidates proposed by the president, but no conflicts over this issue arose in the current review period. The process of appointing judges is transparent and adequately covered by the public media. The involvement of both the president and the Senate increases the likelihood of a balance in political and other characteristics of the judges. Pavel Rychetský, the current chief justice of the Constitutional Court, served as a deputy prime minister in a social democratic government, while other judges have different political backgrounds.

The Czech Republic has long been characterized by apparently high levels of corruption. Although governments have put the struggle against corruption high on their agenda, they have failed to implement effective anti-corruption measures within the bureaucracy and police, or within politics itself. At one level there is a widespread acceptance of the fact that corruption is a normal part of life, at least in business and in the distribution of public funds – some survey evidence suggests that bribery is usual in such cases – and to some extent in dealings with law enforcement. Remarkably, it also affects universities, although in that case its exposure can gain widespread publicity. A dramatic example was the high-profile corruption case against the law faculty of the University of West Bohemia in Pilsen in 2009, after a number of high-profile figures gained degrees after relatively short periods of study, often with inadequate or plagiarized work. However, the greatest problem is the inactivity of politicians. Cases are not investigated when leading political figures may be implicated, as for example in the purchase of military aircraft from the UK firm BAE Systems, decided under an earlier Social Democrat defense minister. The case of Jiří Čunek, a Christian Democrat deputy prime minister in the Topolánek government, attracted even more attention, but with little result. The acceptance of corruption by politicians has led to repeated reluctance to implement tough legal measures.

In the past, economic growth in the Czech Republic largely depended on inward investment by multinational companies exporting motor vehicles and consumer electronics to the rest of the European Union. Attractions included a geographical location in Central Europe, a good transport and communication infrastructure and a disciplined labor force willing to accept wages below the western European level. Detailed coordination of aspects of economic policy was relatively unimportant to the success of this process. In view of the substantially lower labor costs, the details of tax policy could do little to alter the attractiveness of the Czech Republic. Wage and employment protection policies also made little difference to firms that planned long-term investment. The domestic financial system was also of little relevance for firms financed from outside.

However, inward investors have experienced general shortages of labor (largely compensated for by using immigrant workers hired through recruitment agencies), and of skilled labor in particular. This reflected the absence of an adequate training system and deficiencies in education. It presented a constraint on bringing higher-level activities such as research and development into the Czech Republic. Service-sector activities have been attracted but face a severe constraint associated with the shortage of people with adequate language skills. Official responses have included paying subsidies to incoming companies (even after they have decided to invest), although this contributes little to overcoming the fundamental problems with the labor force. Pay for an employee with language skills in an incoming company is frequently higher than pay for a qualified teacher, suggesting that labor shortages in this area are likely to persist.

The principal policy debates in the Czech Republic have not been relevant to the key issue of moving the Czech economy to a higher level of competitiveness by establishing a more skilled and more innovative labor force. The emphasis on creating a low-tax and low-regulation economy threatens to restrict resources for education and training. In the period leading up to the May 2010 parliamentary elections, the case for a growth-oriented strategy based on investing in new technology and a more skilled labor force received no more than rhetorical support.

The unemployment rate increased during the economic crisis, but has stayed below the EU-27 average. However, about half of the jobless are long-term unemployed, and there are substantial regional variations. Whereas unemployment is high in some regions, others suffer from labor shortages. As a reaction to the economic crisis, labor market policy has been expanded, with part of the resources made available through European Social Fund projects. Labor market policy has focused on providing subsidized employment or training to those who are unemployed or whose jobs are under threat. The success of these projects has been limited. Czech employees, especially the older ones, are still rather unused to lifelong learning. Results through mid-2010 also suggest that employers have not been taking advantage of all available resources.

The Czech Republic has been successful in attracting foreign investment and features a high share of self-employed individuals and employers within the active labor force. Barriers to setting up enterprises appear relatively high, but can be easily overcome by buying a pre-registered company from one of the many firms that offer this service, by relying on experienced consultants, or in important cases, the inward investment agency. The most important constraints on domestic businesses are not state bureaucracy but the lack of a sophisticated business environment. Thus risk capital, required for investment in new businesses that develop expensive new technologies, is hardly available at all. This follows from the cautious and conservative approach of the foreign-owned banks. As a result, incoming multinational companies can flourish using finance and technology from outside the country, and it is relatively easy to set up a small business, but the missing element is a community of dynamic businesses able to improve the economy’s international competitiveness.

The Czech tax system was overhauled in January 2008. Reforms replaced the previously progressive personal income tax schedule with a single 15% rate levied on an enlarged base. The move to a flat income tax was accompanied by cuts in the statutory corporate income tax rate from 24% in 2007 to 20% in 2009, and an increase in the concessionary VAT rate applied to many goods and services from 5% to 9%. The reforms were largely revenue-neutral. They reduced the tax burden on companies and the better-off, but did little to reduce the high non-wage labor costs associated with large social security contributions (Hrdlicka et al. 2010). For the broad majority of the population, the high overall tax wedge thus remained unchanged. In the wake of the economic crisis, calls from the political right for further cuts in corporate income tax rates grew louder. However, the Fischer government did not agree on tax reform, so no major measures were adopted.

Reflecting a long period of low budget deficits, the level of debt relative to GDP is very low by international standards. The reaction to the economic crisis has been complicated by sharp policy disagreements. A view from the political right saw this as a source of very immediate danger and emphasized the need for speedy reduction of the deficit, to be achieved by spending cuts. A major anti-crisis measure was to include further cuts in taxes on businesses. A view from the political left emphasized the tolerability of a deficit, and sought to counter the crisis with spending both on infrastructural investment and higher social benefits. The Fischer government sought to combine both approaches, including a so-called anti-crisis program of expansionary measures and a commitment to savings, aimed at keeping the budget deficit to within 5% of GDP. However, its proposals failed to achieve a consensus. President Klaus refused to sign the proposed budget for 2010 into law. The size of future deficits will be heavily dependent on trends in GDP. Early results for 2010 suggest that growth rates have been overestimated, pointing to a possible further rise in deficits. This raises more forcefully questions of how, and how quickly, balance should be restored.

The Czech health care system was developed in the early 1990s following the example of neighboring West European countries. All citizens are entitled to equal and free medical treatment paid for by the state and private insurance schemes. Increased life expectancy and very low infant mortality demonstrate the quality of health care in the Czech Republic. The most visible problem is a periodic failure of the insurance system to cover rising costs. In early 2008, the Topolánek government initiated the first stage in its conception of health care system reform, introducing fees for pharmacy prescriptions, visiting a doctor and receiving overnight treatment in a hospital. These were set at a very low level, but caused controversy both by breaking the constitutional commitment to free health care (the Constitutional Court found this acceptable by one vote) and by imposing the charge on everyone, irrespective of age or means. In January 2009, the dissatisfaction with health care reform, even within the governing coalition, led to the dismissal of Minister of Health Tomáš Julínek. The Fischer government failed to agree on health care reform and did not adopt any measures.

Quantitative indicators of social exclusion suggest that there are some problems within Czech society. At the national level, average income has increased, but not as much as in the previous period. Inequalities in income have also gradually increased at the regional level (i.e., between the capital and the rest of the country) and across different sectors. The effects of the economic crisis are visible in declining rates of life satisfaction. Income inequality measured using the Gini index has shown a slight increase. Due to a relatively favorable employment picture and a rather redistributive social policy, however, income inequality in the Czech Republic remains one of lowest among the OECD countries. A stubborn problem is the social exclusion of Roma population. For instance, more than half of all Roma children are still enrolled in special schools for pupils with learning difficulties. In 2008, a newly created agency launched a number of pilot projects aimed at increasing the social inclusion of Roma.

The employment rate for women in the Czech Republic is the highest among the post-socialist member states of the OCED, but does not exceed the OECD average. The level of child care provision declined significantly during the nineties, and there has been no significant improvement since, even though the growing number of single mothers – more than one-third of children are now born outside of wedlock in the Czech Republic – has further increased the demand for child care. Another problem has been the rather long maximum duration of maternity and paid parental leave (28 weeks in the case of maternity leave, up to four years in the case of parental leave), which has reduced the incentives for early reentry into the labor market. Debates on family policy have paid relatively little attention to the issue of labor market integration for women, focusing rather on the level of parental leave benefits and family and children allowances. The Topolánek government cut the level of parental leave benefits, which had been increased by its social-democratic predecessor, by approximately 20%. After a heated debate in the Chamber of Deputies in late 2009 and early 2010, benefits were restored to their former value by parliament. However, this legislation was vetoed by President Klaus in April 2010.

The Czech pension system is characterized by a dominant public pillar providing relatively generous pensions. There have been attempts over the last several years to find consensus on more substantial reforms to the pension system. A new expert group in charge of preparing a reform proposal was set up in January 2010 by the Ministry of Labor and Social Affairs. Agreement has been relatively easy on gradual increases in the retirement age. The retirement age is currently being gradually increased to reach 63 for men and 61 for women in 2012. Further change has been blocked by disagreement over the future role for private pension funds. Any future pension reform has also been complicated by a Constitutional Court judgment of April 16, 2010, which found the existing system to be unconstitutional. The extent of the gap it created between contributions from the highest incomes and the level of pension received was judged to be unjust. Parliament has been allowed until September 2011 to undertake necessary revisions to the existing law, which could imply reductions in the lowest levels of pensions so as to allow for increases at the top end.

The Czech Republic has experienced relatively high levels of immigration since EU accession. Foreign citizens made up 4.2% of the population in 2008, reaching over 7% for the 20-39 age group. The largest immigrant groups within the Czech Republic were Ukrainians, Slovaks and Vietnamese (respectively 30%, 17% and 14% of the total immigrant population). Asylum seekers are a very small part of immigration, amounting to 1,260 individuals in 2009. A more important role has been played by foreign workers hired by agencies capitalizing on labor shortages in growing regions. In many cases, these migrants have been kept in dependency by the agencies.

Both the Topolánek and the Fischer governments did little to develop a systematic integration policy for immigrants. When the economic crisis hit foreign workers, help from the Czech government took the form of programs for returning impoverished migrants to their country of origin. Another change, unlikely to encourage more immigration, has been the introduction of a language examination on the CEFRL (Common European Framework of Reference for Languages) level A1 as a condition for foreigners’ permanent residence in the Czech Republic as of January 1, 2009. Support for migrants in cultural, social and educational matters is largely provided by NGOs, which are more acquainted with the reality of migrants’ daily experiences and are more flexible in providing assistance than state institutions. These NGOs, which often receive state funding, are most active in urban centers such as Prague and Brno.

The accepted political consensus in the Czech Republic, backed by a 2003 government policy document formulated after cross-party discussions, is that no serious external security threat exists in Central Europe, and that safety is guaranteed by NATO membership. In the period under review, the sharp divisions over the placing of a radar tracking station in the Czech Republic as part of a U.S. anti-missile protection system continued. The proposal was made public during 2006 and resulted in a strong public debate with public demonstrations against the plan. Moreover, Russia objected to the U.S. proposal, arguing that it undermined Russian security. Czech politics was divided, with the Topolánek government keen to show itself as a close ally of the United States, as unconcerned about Russian fears, and even unconcerned about damage to the country’s relations with Russia. Opinion polls suggested resistance to the proposal from the majority of the population, reflecting opposition to the establishment of any foreign military bases in the country, concern that it would make the country a target for external attack, and doubts that the plan would contribute anything to improving world security. The original plan was modified after the new U.S. president came to office in early 2009 amid disappointment from its enthusiastic supporters in the Czech Republic.

The Czech Republic has adapted itself reasonably well to the new security situation resulting from accession to the Schengen area. Police cooperation with the other Schengen countries, most notably Germany and Austria, has been smooth. In January 2009, a comprehensive police reform took effect, which has brought a clarification of tasks, an improvement in training and a modernization of equipment. In contrast, the reform of intelligence services, which have suffered from problems of coordination and control, has made less progress.

Environmental issues are nominally a major concern of Czech governments, but key legislation is lacking on many areas outlined in the government’s State Environmental Policy of the Czech Republic (2004 – 2010), which is intended to provide a consensual basis for future government actions. During the EU accession process, environmental protection assumed a high priority. However, following accession, spending on environmental protection has stagnated at around €800 million (CZK 20 billion) per year, a level clearly below the EU average. The Green Party was part of the Topolánek government, and placed stress on certain high-profile environmental issues, but its views were opposed by strong lobbies that cast doubt on whether global warming is taking place, and that see environmental rules imposed by the European Union as excessively restrictive. On a number of issues, other parties have effectively been waiting until the passage of elections that were expected to remove the Greens from any position of influence. Thus, no decision was made on the expansion of nuclear power, or on a removal of restrictions on open-pit mining in North Bohemia. The Green Party supported the Fischer government for a time, but the ministers it proposed resigned following a dispute over plans for reducing emission levels from a coal-fired power station, which the Green Party judged inadequate.

Czech governments have made strong verbal commitments to supporting research and innovation. A government body, the Research and Innovation Council, is chaired by the prime minister and produces regular and substantial reports on the comparative level of Czech research activity. In 2008, the council called for far-reaching changes in Czech research and innovation policy. One major proposal, the establishment of a new agency in charge of distributing state funding for applied research, was implemented in 2009. A second major proposal – a drastic shift of resources from basic to applied research – was realized only partly due to massive protests by researchers from universities and public research institutes. Overall spending on R&D relative to GDP in the Czech Republic falls near the EU average, with growth in recent years. However, much of the research that can lead to innovation is conducted by multinational companies, particularly in the motor-vehicle sector. This is advantageous for them because of lower Czech labor costs and the established research and production base. It does not reflect results of government initiatives or policies, nor does it depend on contacts with government research institutes or universities. Existing government programs have been taken up by some private companies, but there is no sign as yet of the development of a significant domestically owned high-tech sector. Barriers remain in the poor links between production and research and in the lack of access to capital.

The Czech Republic has a relatively well-functioning system of vocational training, and one of the highest proportions of people with secondary education in the OECD. Enrollment in tertiary education, on the other hand, is still relatively low. Although this figure has doubled over the last two decades, no more than 13% of the Czech population has a tertiary degree. Part of the problem is the low public spending on education.
The Topolánek government began work on a major reform of student finance in higher education. This was to introduce tuition fees alongside a system of grants and loans that were intended to remove students from immediate dependence on parental support. There was strong opposition to the proposal and it was not pushed forward by the Fischer government.