Oecd Economic Surveys: Czech Republic - 2004 Issue 17 (Oecd Economic Surveys)

Table of contents......Page 4
Basic Statistics of the Czech Republic......Page 8
Executive summary......Page 9
Assessment and recommendations......Page 12
Growth has picked up......Page 24
Box 1.1. The political situation......Page 25
Box 1.2. The OECD's autumn 2004 economic projection......Page 26
Figure 1.2. Years required for catch-up......Page 27
The fiscal position needs improving......Page 28
Figure 1.3. Inflation and interest rates......Page 29
Figure 1.4. Trends in government deficit, expenditure and revenue......Page 30
Figure 1.6. Average tax wedge for a single person, 2003......Page 31
Figure 1.7. Percentage increase in old-age dependency ratios by 20201......Page 32
But entering the euro-area presents challenges for macroeconomic policy......Page 33
And significant weaknesses in the business environment need to be addressed......Page 34
Box 1.3. The structure of Czech business......Page 35
Figure 1.8. Labour utilisation......Page 36
Figure 1.9. Percentage of the population that has attained tertiary education, 20011......Page 38
Immigrants play an increasing role in the labour market......Page 39
Other policy challenges: the environment......Page 40
Notes......Page 41
Bibliography......Page 43
Annex 1.A1. Recent revision of GDP data......Page 44
2. Fiscal policy and public-expenditure reform......Page 46
Box 2.1. Policy assessment on fiscal policy and public-expenditure reform......Page 47
The 2003 deficit outcome is shaped by revenue and expenditure surprises......Page 48
Box 2.2. Government budget accounts......Page 49
The fiscal reform programme improves budgetary procedures and starts with tackling the deficit......Page 50
Figure 2.1. Deficit ambitions in the Ministry of Finance’s Budget Outlooks for 2003-2006 and 2005-2007......Page 51
Assessing the proposed new budgetary framework......Page 52
Extra-budgetary funds......Page 53
Table 2.1. Fiscal effects of revenue measures on the State Budget as outlined in the Budget Outlook 2004-2006......Page 54
Table 2.2. Fiscal impact of expenditure measures on the State Budget as outlined in the Budget Outlook 2004-2006......Page 55
Table 2.3. The main remaining sources of privatisation revenue......Page 57
Pension reform......Page 58
Table 2.4. Performance indicators: sustainable retirement income......Page 59
Figure 2.3. Aggregate replacement rate of pensions in 1988-2001......Page 61
Table 2.5. Pension cost relative to GDP......Page 62
Spending on transport infrastructure......Page 66
Public-sector tenders......Page 67
Background......Page 68
Table 2.6. Key features of public finance across the three layers of government......Page 69
Assessment......Page 70
Notes......Page 72
Bibliography......Page 74
Annex 2.A1. Progress on implementing the 2003 fiscal reform proposals......Page 75
Annex 2.A2. Background information on government accounts......Page 79
Table 2.A2.1. Extra-budgetary funds......Page 82
Table 2.A2.2. Guarantees and off-budget liabilities......Page 83
Annex 2.A3. General government accounts......Page 85
Table 2.A3.1. Adjusted-cash general government accounts, 2000-2004, as a percentage of GDP......Page 86
Table 2.A3.2. Adjusted-cash general government accounts, 2000-2004......Page 87
The Czech strategy for adopting the euro is sound......Page 88
Box 3.1. Policy assessment on entry to the euro area......Page 89
Table 3.1. Timing issues in the fulfilment of Maastricht criteria......Page 90
Figure 3.1. Maastricht fiscal criteria and 2004 Convergence Programme ambitions......Page 92
The monetary criteria......Page 93
Box 3.3. The Czech National Bank’s inflation targeting regime......Page 94
Figure 3.2. Reference rates for the Maastricht inflation criteria......Page 95
Figure 3.3. A 2.25 per cent band in the context of past exchange rates......Page 97
Notes......Page 98
Bibliography......Page 99
Annex 3.A1. The Maastricht criteria for entry to the euro area......Page 100
Annex 3.A2. The CNB’s statement on the exchange rate criterion......Page 102
Bankruptcy: assessing progress towards a better system......Page 104
Box 4.1. Policy assessment on the business environment......Page 105
Figure 4.1. Case-loads in bankruptcy and settlement......Page 107
Administrative requirements for setting up a business are cumbersome......Page 108
Corruption: assessing the latest policy initiatives......Page 109
Support to investment in manufacturing investment and selected service sectors......Page 111
Box 4.2. Targeted support for manufacturing and selected service sectors......Page 112
Support to small-and-medium enterprises (SMEs)......Page 114
Box 4.3. Support to small-and-medium enterprises (SMEs)......Page 115
Support to the steel and mining sectors......Page 116
Telecommunications......Page 117
Table 4.1. Prices charged by the incumbent for local and long-distance calls......Page 118
Table 4.2. Broadband prices: comparison of best offers in 2003 with download speed 512 Kbps......Page 119
Energy......Page 120
Table 4.3. Opening of energy markets......Page 121
Notes......Page 122
Bibliography......Page 125
Annex 4.A1. Registration of a company in the commercial register......Page 126
Table 4.A1.1. Steps in commercial registry......Page 127
Annex 4.A2. Targeted measures to attract FDI: lessons from international experience......Page 128
Annex 4.A3. Credit registers of enterprises......Page 129
Annex 4.A4. Regulation of network industries......Page 130
Issues related to the Czech welfare system......Page 134
Box 5.1. Policy assessment and recommendations for the labour market and workforce skills......Page 135
Box 5.2. The social protection system......Page 138
Table 5.1. Low-income assistance and family benefits......Page 139
Table 5.2. Definition of minimum subsistence amount (MSA) and income tests for low-income assistance......Page 141
Box 5.3. The new Employment Act......Page 142
Table 5.3. Average effective tax rates (AETR) for transitions from full-time unemployment to full-time employment......Page 143
Figure 5.2. Gross earnings and net income, monthly, 2003......Page 144
Table 5.4. Disability pension schemes......Page 146
Labour mobility is low......Page 148
Figure 5.3. Distribution of expenditure on active labour market policies, 2003......Page 149
Box 5.4. Active labour market policies......Page 150
The tax wedge is too high......Page 151
Table 5.5. Social security and health insurance contribution schedule......Page 152
Employment protection legislation is uneven......Page 153
Figure 5.5. Dismissal cost by job tenure, 2003......Page 154
Box 5.5. Employment protection: legislative changes......Page 155
Skills formation and education are not sufficiently responsive to changing labour market demand......Page 156
Figure 5.6. Share of population in full-time study programmes......Page 157
Integrating the Roma should get higher priority......Page 159
Access to proper education is insufficient......Page 160
Efforts to improve labour force participation and housing access are welcome......Page 161
Better data is needed to improve policy towards Roma integration......Page 162
Notes......Page 164
Bibliography......Page 167
Table 5.A1.1. Welfare-benefit expenditures, 2003......Page 169
Table 5.A2.1. Net replacement rates for a single person in the initial period of unemployment......Page 170
Table 5.A2.2. Net replacement rates for lower income recipients......Page 171
Table 5.A3.1. The calculation of sickness benefits......Page 172
Table 5.A4.1. Administrative procedures for individual notice and dismissal......Page 173
Migration history: towards free movement of labour......Page 176
Box 6.1. Policy assessment on the economic effects of migration......Page 177
Box 6.2. Statistics on migration flows......Page 178
Figure 6.1. Migration flows of Czechs, Slovaks and other citizens......Page 179
Figure 6.2. Central and eastern European residents in western EU countries......Page 180
Figure 6.3. Foreign residents by type of visa, 1992-2003......Page 181
Figure 6.4. Main countries of origin of foreign residents......Page 182
Figure 6.5. Foreigners working in the Czech Republic by type of permit......Page 183
Box 6.3. Immigration legislation and process......Page 184
Box 6.4. The pilot project for active selection of qualified foreign workers......Page 187
Economic impacts of immigration are most likely positive but difficult to quantify......Page 188
Labour market effects come from reducing skill shortages......Page 189
Table 6.2. Distribution of employment, 2003......Page 190
Figure 6.6. Migration and incentives to migrate to the Czech Republic from Slovakia......Page 191
Figure 6.7. Skill mix of jobs held by temporary permit holders by main source country, 2003......Page 192
Table 6.3. Education level of central and eastern European workers......Page 193
Fiscal impacts are most likely positive but offsetting ageing with migration can only be partial......Page 195
Figure 6.8. Additional employment required to stabilise the ratio of old-age population to employees......Page 196
Figure 6.9. Average annual gross earnings in Germany relative to the Czech Republic......Page 197
Box 6.5. The treatment of Czech workers in EU15 during the transition period......Page 198
Table 6.4. Treatment of Czech workers in the EU15 countries during the first two years of the transition period......Page 199
Table 6.5. Migration intentions in the EU acceding candidate countries in April 2002......Page 201
Conclusions and recommendations for a better targeted immigration policy......Page 202
Notes......Page 205
Bibliography......Page 207
Performance......Page 210
Box 7.1. The integration of policies across sustainable development areas......Page 211
Table 7.1. Main indicators: climate change......Page 212
Table 7.2. GHG emissions and sectoral indicators......Page 213
Policy......Page 214
Conclusions......Page 216
Performance......Page 217
Table 7.4. Main indicators: air pollution......Page 218
Policy......Page 220
Figure 7.3. Target in the UNECE Convention on Long-Range Transboundary Air Pollution and the situation in year 2000......Page 221
Notes......Page 224
Bibliography......Page 225
Glossary of acronyms......Page 226