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