Europe 2020 in the Czech Republic

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 18 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.

Country overview

Progress has been made on fiscal and structural policies during the last year and the Czech Republic has reduced its budget deficit in 2012, despite the deteriorating economic situation. In the last twelve months, reformed the public procurement system, and took steps to strengthen the EU funds management and control system. However, reform efforts in other areas, including the long-term sustainability of public finances, the quality of fiscal adjustment, childcare services and education have been limited.

In the short term, the main challenge is to kick-start economic recovery by pursuing growth friendly fiscal consolidation, ensuring the correct use of EU funds, better exploiting the potential in the labour market and improving public administration, education and research. While the case for moving ahead with structural reforms remains strong, weak growth and rising unemployment make it crucial to target policies that can also deliver results in the short term.

2013 European Commission's recommendations for the Czech Republic in brief

The Commission has issued seven country specific recommendations (CSRs) to the Czech Republic to help it improve its economic performance. These are in the areas of:

  1. Sustainable public finances
    The Czech government deficit of 2012 is higher than expected. It is therefore necessary that Czech authorities continue their efforts to bring public finances back on track according to the agreed timetable. Repeated and untargeted cuts in public investment expenditure should however be avoided: what is needed is a targeted public investment, including with the support of EU structural funds, in major projects that contribute to job creation and growth.
  2. Taxation
    Taxes on labour are high in the Czech Republic, while other taxes such as taxes on housing and vehicle circulation are below the EU average. The Czech Republic should reduce the taxes on labour to promote employment, and balance this decrease by an increase in those taxes, which are low and less detrimental to growth. More taxes could be collected by improving the performance of the tax administration. Finally, instead of raising the taxes, the Czech Republic has the possibility to broaden the tax bases.
  3. Pensions and employment of older workers
    The Czech pension and healthcare systems are facing substantial expenditure increases in the long term, which are not sustainable. Decisive action is needed now to change this course, by ensuring that people work longer and by reforming the healthcare system.
  4. Labour market
    In a context of demographic pressure, the Czech Republic should encourage the labour market participation of groups that are underrepresented. This is particularly the case for women with young children. The Czech Republic must ensure that affordable and good quality childcare is available. The efficiency of the Public Employment Service can also be further enhanced.
  5. Public administration
    Low operational efficiency in the public administration and corruption are perceived as major issues in the Czech Republic. The Czech government should address this without delay, notably by adopting a new and clear framework for public servants and by improving the implementation of the new law on public procurement.
  6. Education and higher education
    The overall performance of Czech pupils in international testing has been decreasing. Therefore the Czech Republic needs to put a system in place to identify and support weaker schools and pupils. The higher-education system has recorded an unprecedented increase in the number of students. The Czech government needs to adopt a comprehensive reform of universities to ensure that all of them are equipped with the skills needed to succeed in the labour market.
  7. Services
    The Czech Republic is amongst the Member States with the highest number of regulated professions. The Czech authorities have started a review of the regulatory framework for these professions. This initiative must be taken forward in order to reduce or eliminate barriers to those professions for which regulation is not proven necessary or is considered excessive. Easier access could unlock further employment creation and growth.

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

European Semester Documents