European Commission
Europe 2020

Country-specific Recommendations

The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 12 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.

Proposed recommendations for the Czech Republic 2012

Real GDP growth is expected to stagnate in the Czech Republic in 2012, while it should pick up to 1.5% in 2013. The unemployment rate started to decline at the beginning of 2010 from a level close to 8% to end on 6.7% in the fourth quarter of 2011. It is expected to rise to 7.2% in 2012.

The Czech Republic has introduced a set of measures to strengthen the sustainability of the pension system, reform the tax system, improve the performance of the public employment service and increase the transparency and efficiency of public procurement.

However, in a context of increased competition from emerging economies and the steadily decreasing inflows of new equity capital, the key challenge for the Czech economy is to support economic recovery and long-term growth by improving the quality of fiscal adjustment, reducing inefficiencies and lack of stability in the public administration, making better use of the potential in the labour market, especially for women with children, and better mobilising factors facilitating the transition to growth based on innovation, higher value added and human capital. The growth of innovative enterprises is also constrained by inadequate links between the science base and the business sector and by inefficiencies in public funding of research. Inefficiencies and lack of stability of the public administration do not create a supportive environment for long-term growth. Furthermore, despite the relatively low debt-to-GDP ratio, and the recent reforms, public finances are not yet on a sustainable path.

Overview of recommendations

1. Ensure planned progress towards the timely correction of the excessive deficit. To this end, fully implement the 2012 budget and specify measures of a durable nature necessary for the year 2013 so as to achieve the annual average structural adjustment specified in the Council recommendation under the Excessive Deficit Procedure. Thereafter, ensure an adequate structural adjustment effort to make sufficient progress towards the medium-term objective, including meeting the expenditure benchmark. In this context, avoid across-the-board cuts, safeguard growth-enhancing expenditure and step up efforts to improve the efficiency of public spending. Exploit the available space for increases in taxes least detrimental to growth. Shift the high level of taxation on labour to housing and environmental taxation. Reduce the discrepancies in the tax treatment of employees and the self-employed. Take measures to improve tax collection, reduce tax evasion and improve tax compliance, including by implementing the Single Collection Point for all taxes.
   More information on the economy of the Czech Republic
2. Introduce further changes to the public pension scheme to ensure their long-term sustainability. Reconsider plans to allow an earlier exit from the labour market. Ensure broad participation of younger workers in the envisaged funded scheme to improve adequacy of pensions.
   More information on pensions in the EU
3. Take additional measures to significantly increase the availability of affordable and quality pre-school childcare facilities.
   More information on childcare facilities in the EEA
4. Strengthen public employment services by increasing the quality and effectiveness of training, job search assistance and individualised services, including of outsourced services.
   More information on the European employment strategy
5. Adopt and implement as a matter of urgency the Public Servants Act to promote stability and effectiveness of the public administration to avoid irregularities. Ensure adequate implementation of the new Public Procurement Act. Address the issue of anonymous share holding. Ensure correct implementation of EU Funds and step up the fight against corruption.
6. Adopt the necessary legislation to establish a transparent and clearly defined system for quality evaluation of higher education and research institutions. Ensure that the funding is sustainable and linked to the outcome of the quality assessment. Establish an improvement-oriented evaluation framework in compulsory education.
   More information on the European strategic framework on education and training

See how the Czech Republic compares with other EU Member States in key areas

European Semester Documents

National Reform Programme

All Member States have committed to the Europe 2020 strategy. However, each country has different economic circumstances and translates the overall EU objectives into national targets in its National Reform Programme – a document which presents the country's policies and measures to sustain growth and jobs and to reach the Europe 2020 targets. The National Reform Programme is presented in parallel with its Stability/Convergence Programme, which sets out the country's budgetary plans for the coming three or four years.

Macroeconomic indicators

Europe 2020 targets – State of play