In this week’s business news: Unemployment falls; Czech Banking Association releases bleaker economic outlook for 2013; more Czech companies are moving to tax havens; Moravia Steel receives large fine for collusion in Germany; Kofola is considering expanding into Balkans; and government debt decreases in Q2.
All 14 ministers in the freshly sworn-in Czech government have assumed their posts. On Thursday, Dalibor Štys took over at the Education Ministry, said he would not go ahead with a reform of the university system planned by his predecessor unless it gets sufficient political backing. The government officials inducted into office on Thursday included Minister of Labour and Social Affairs František Koníček, Justice Minister Marie Benešová, Health Minister Martin Holcát, and others.
Prime minister designate Jiří Rusnok has filled three more ministerial posts in the emerging caretaker cabinet. Outgoing defense minister Vlastimil Picek, who has received an offer to continue in office, has agreed to do so. Jiří Cienciala, the rector of the Ostrava School for Entrepreneurs, is to head the Industry and Trade Ministry while the former chief inspector of Czech Railways Zdeněk Žák will lead the Transport Ministry. Mr. Rusnok has not yet filled the post of finance minister and there has been speculation he may be considering former caretaker prime minister Jan Fischer for the post. The post of environment minister is likewise still vacant. The new cabinet is to be sworn in on Wednesday.
Many ministers of the outgoing centre-right government have refused an invitation from President Miloš Zeman for dinner at Prague Castle on Monday, in what is perceived as an obvious snub to the head of state in the wake of recent developments. No ministers from the TOP 09 party will be present, according to the CTK news agency, and Karolina Peake the head of LIDEM, the smallest party in government has also refused the invitation. It is not clear how many Civic Democrat ministers may show up. The centre-right coalition has criticized the head of state for ignoring the fact that the centre right parties collected 101 signatures -a majority in the lower house – in support of their nominee for prime minister Miroslava Němcová. They accuse Mr. Zeman of forming his own “puppet” cabinet.
Natural scientist and the head of research and development department at the education ministry, Dalibor Štys, will become the next education minister in the caretaker government of Prime Minister Designate Jiří Rusnok. Since being given the task of putting together a caretaker cabinet last Tuesday by President Zeman, Mr. Rusnok has secured 10 ministers, though key positions remain unfilled, including the posts of the minister of finance and minister of industry and trade. Mr. Rusnok is hoping he will complete the list of names by the end of the week, or Monday at the latest, so he can take it to the president next week for confirmation. His choices for ministers have been criticized on both sides of the aisle in the lower house of parliament, who say the technocrat cabinet is made up of friends of the president, not experts.
In related news, local employment bureaux have issued approximately 1,280 relief payments to families in areas struck by floods; hundreds of unemployed people also volunteered to help in clean up operations. The news was revealed on Wednesday by the spokesman for the central employment office Jiří Reichl. People whose property was lost or badly damaged in the recent floods can apply for immediate help of up to 51,150 crowns. The spokesman noted that a number of towns and villages had signed agreements with employment bureaux covering publically-beneficial work.
The European Commission has criticized the Czech Republic for failing to pass a new law on civil servants and said that the country may lose most of the financing it receives from the EU structural funds starting next year. EU officials are concerned that civil servants, especially at Czech ministries, change together with the political leadership, which thwarts continuity and efficiency of policy implementation. The Czech Republic is the only EU country that has yet to pass a law that would prevent high fluctuation in the civil service. If the Czech Republic does not pass the bill by the end of the year, it could lose up to 500 billion crowns in European funding.
Some institutions in the public sector reportedly hike their employee figures in order to get more money for wages. The daily Pravo broke the news on Monday saying that while government austerity measures had frozen salaries in most public sector institutions Prague Castle employees got regular salary hikes. This was possible due to the fact that the Office of the President artificially raised the number of employees to 114 while in reality it was employing merely 87. Finance Minister Miroslav Kalousek told Czech Television that this tactic, employed by some firms, was unethical but not strictly illegal since it was hard to prove that the additional posts would not be filled shortly.
Union leaders and representatives of the Czech Republic’s spas have demanded an immediate halt to changes in the system of spa treatment. They say the very existence of the country’s spas has been threatened by a shortening of the average length of stays and a marked reduction in payment for treatment by health insurers. Doctors have reportedly become afraid to prescribe spa care even in cases where they are still able to do so. The unions and spa owners have called for a meeting with the minister of health to address the problem.
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