Czechia

   

Policy Performance

#21

Economic Policies

#21
With a strong but slowing economy, Czechia falls into the middle ranks (rank 21) in terms of economic policies. Its score on this measure represents a gain of 0.8 points relative to 2014.

Previously high growth rates have gradually slowed, but remain strong. Growth has increasingly been supported by domestic demand, in part due to rising pay levels. Wages have risen faster than labor productivity for four years in a row. Stagnating motor-vehicle exports, previously the main driver of growth, contributed to slowing export growth.

Unemployment rates have been the lowest in the EU for some time, and employment rates high. The difficulty in filling high-skilled jobs is a barrier to investment. The most substantial minimum-wage increase since 1991 took place in 2019, but levels remain low relative to the EU average.

Direct taxes, including the flat personal income tax, are low. A major income-tax reform passed in 2018 has been delayed until 2021 due to revenue-reduction fears. Public debt is very moderate by EU standards, with recent fiscal surpluses helping to push it further downward. The government has declined to introduce the euro, and has not sought to join the EU banking union.

Social Policies

#21
With a generally effective social system, Czechia receives middling scores with regard to social policies (rank 21). Its overall score on this measure remains unchanged relative to 2014.

Educational outcomes are good overall, though Roma children are often shunted to lower-quality schools. There is a shortage of qualified teachers. While income inequality and poverty rates are low, the Roma population is marginalized overall. The lack of affordable housing is becoming a problem, with the number of people without homes growing.

The healthcare system, based on universal compulsory insurance, offers high-quality services. The system for medical-device reimbursement changed significantly in 2019, to the benefit of patients. Women’s employment rates are below the OECD average, especially for women with small children. Child-care provision is a problem, exacerbated by the growing number of unmarried parents.

The pension system is in surplus, with only moderate sustainability concerns. While the inflow of asylum seekers has been modest, the EU refugee crisis has triggered a highly polarized debate on migration, with very few citizens supporting rules that would allow refugees to settle permanently in the country.

Environmental Policies

#26
With a mixed record on environmental issues, Czechia’s score for environmental policies places it in the lower-middle ranks (rank 26) internationally. Its score on this measure has declined by 0.4 points relative to 2014.

The country’s energy policy and heavy dependence on fossil fuels have translated into slow progress on climate policy. A draft plan for the 2021 – 2030 period showed low ambitions in areas such as renewables and energy efficiency, particularly given the positive economic environment. The country is on track to meeting these unambitious targets.

Water management policy has experienced similar problems, with the government showing insufficient commitment on issues such as storm-water management, water retention in agriculture and urban wastewater treatment. Efforts to reduce fossil-fuel based heating have been weak. Biodiversity is deteriorating due to agriculture and transport activities.

The government has reiterated its commitment to the Paris Agreement. However, it has played an active role in blocking the passage of ambitious environmental goals at the EU level, and does the least amount possible to fulfil its EU obligations.

Democracy

#18

Quality of Democracy

#16
With criticism over the current prime minister’s past and present conduct dividing society, Czechia falls into the middle ranks (rank 16) in terms of democracy quality. Its score on this measure has declined by 0.3 points relative to 2014.

Media mogul and Prime Minister Andrej Babiš has been accused of corruption involving an alleged misuse of EU funds to finance part of his media conglomerate. The appointment of a friend of the president as justice minister sparked widespread protests, and was seen as an effort to curtail judicial independence.

Babiš has repeatedly criticized the public media for alleged bias, with further threats to journalists’ independence seen in controversial appointments to the public-media oversight council. Babiš’ own company continues to dominate the daily print-media business, but a vibrant new online and independent investigative-journalism sector has emerged.

Civil and political rights are generally respected, with large-scale protests having emerged under the Babiš government. Discrimination against women and Roma remains problematic. Executive actions are typically predictable, although legal ambiguities sometimes cause controversy.

Governance

#24

Executive Capacity

#29
With a government currently driven strongly by the prime minister, Czechia falls into the lower-middle ranks (rank 29) with regard to executive capacity. Its score on this measure has improved by 0.4 points relative to 2014.

While there is no central body coordinating strategic planning, medium-term and long-term strategic frameworks exist. The government office has little sectoral expertise, instead playing a primarily coordinating function. Line ministries develop policies with input from the government office.

Recent governments have been based on coalition agreements which cover policies and coordination rules. The president has been instrumental in negotiating Communist Party support for policies. Communication has become more coherent, through driven by the prime minster. Babiš has made use of his media properties to “name and shame” errant ministers, thus securing their compliance.

Reliance on RIAs has declined under the current government. New guidelines for ex post evaluations are being developed. Consultation with societal actors has diminished under the current government, but new forms of dialogue are emerging at the regional and local levels. Babiš’ own rise to power and wealth is seen as a product of lax regulatory environments and the value of political connections.

Executive Accountability

#14
Despite its highly polarized media and political environments, Czechia falls into the upper-middle ranks (rank 14) with regard to executive accountability. Its score on this measure has gained 0.4 points relative to its 2014 level.

The current government is led by the owner of a media group that dominates the print media, but a surge in online and independent media skeptical of the government has created considerable high-quality content, and has rejuvenated public support for media organizations. However, this political polarization has deepened societal divisions.

Parliamentarians have considerable resources and strong formal oversight powers. The independent audit office closely scrutinizes the use of EU and other funds, as well as the operations of state entities. The ombuds office is a critical defender of civil rights. The functions of the relatively small data-protection office have been expanded with the country’s implementation of the GDPR.

Decision-making in the prime minister’s party is highly centralized, but other parties consult members more routinely. Economic interest groups have considerable resources and policy expertise. The broader civil-society sector is vibrant, with groups showing varying degrees of sophistication.
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