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Journal of European Social Policy

DOI: 10.1177/0958928704044623 2004; 14; 253 Journal of European Social Policy

Martin Potucek Accession and Social Policy: The Case of the Czech Republic

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Accession and social policy: the case of the Czech RepublicMartin Potucek*, Charles University in Prague, Czech Republic

Article

Journal of European Social Policy 0958-9287; Vol 14(3): 253–266; 044623 Copyright © 2004 SAGE Publications, London,Thousand Oaks and New Delhi, DOI: 10.1177/0958928704044623

Summary This paper assesses the place of EUaccession among the determinants of thechanges taking place in the Czech social policyafter 1989. Compulsory social and healthinsurance were re-introduced in the early1990s, along with a guaranteed subsistenceminimum for all, and an institutionalized stateemployment policy. This paper argues thatEU-derived policies have had only a limitedimpact on Czech social-policy reform, focus-ing mostly on institution building. This phe-nomenon can be attributed to the apparentdiscrepancy between Copenhagen criteria ofaccession (1993) and the Lisbon Strategy,which was accepted as a policy guideline in2002. Thus, the main concept able to explainCzech social-policy development after 1989 isthat of institutional and behavioural pathdependency as the country exhibited resist-ance to change coupled with a strong adher-ence to the Bismarckian, corporatist, welfarestate. This makes the Czech Republic a specialcase compared to the other Visegrad coun-tries, where the pressure from neo-liberalpublic-policy concepts of the World Bank andthe International Monetary Fund found itsexpression in the introduction of more resid-ual social policies.

Key words Czech Republic, European Unionaccession, social and institutional change,social policy, transition

Résumé Cet article tente d’évaluer l’impor-tance de l’adhésion à l’Union européenneparmi les déterminants des changements quiont influencé la politique sociale tchèqueaprès 1989. Une assurance santé et socialeobligatoire a été introduite au début desannées 1990 de même qu’un minimumgaranti de subsistance pour tous et une poli-tique d’emploi public institutionnalisée. Lespolitiques liées à l’adhésion à l’Unioneuropéenne n’ont eu qu’un impact limité surles réformes de la politique sociale tchèque, secentrant surtout sur la création d’institutions.Ceci peut être attribué à l’apparente dif-férence entre les critères d’adhésion deCopenhague (1993) et la stratégie deLisbonne qui a été acceptée qu’en 2002comme une ligne directrice politique. Dès lorsle principal concept qui peut expliquer lesdéveloppements des politiques socialestchèques après 1989 est celui de la dépen-dance de sentier institutionnelle et comporte-mentale. Ce pays a montré une résistance auxchangements avec un fort appui en faveurd’Etat bismarckien et corporatiste. C’estpourquoi la République tchèque constitue uncas particulier comparé aux autres pays deVisigrad où les pressions des conceptionsnéolibérales des politiques publiques de laBanque mondiale et du Fonds monétaireinternational se sont exprimés par l’intro-duction de politiques sociales plus résiduelles.

* Author to whom correspondence should be sent: Martin Potucek, Centre for Social and EconomicStrategies (CESES), Faculty of Social Sciences, Charles University in Prague, Celetná 20, 116 36 Prague 1,Czech Republic. [e-mail [email protected]]

© 2004 SAGE Publications. All rights reserved. Not for commercial use or unauthorized distribution.

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Developmental trends

Before the political breakthrough in 1989,totalitarian political systems and centrallycontrolled social policies were common fea-tures of all central and eastern Europeancountries (with the exception of the formerYugoslavia). Deacon (1993) refers to suchsocial policies as state bureaucratic collec-tivism (work and privilege). This could also bereferred to as over-institutionalized socialistpaternalism (Vecerník, 1993). Employmentwas compulsory, there were virtually no waysof influencing political decision-making pro-cesses from below, and social policy washighly centralized and run by the CommunistParty/ state.

Following the collapse of communistregimes in the region, there began a com-bination of partly spontaneous, partly con-trolled processes of rapid political, economicand social change. It is difficult to identify towhat extent these processes have been influ-enced by conscious, organized collectiveactions and/or deliberate decisions of the stateauthorities, and what were the intended andunintended consequences of actions taken.Three phases of social-policy development canbe identified according to the prevailing politi-cal tasks and priorities of the given period inthe Czech Republic.

Phase 1: designing new institutions(December 1989–June 1992)

Since the very beginning, the conceptual foun-dations of pending reforms were discussed andclarified and some of the social privileges ofthe communist establishment were taken away.Various volunteer initiative groups intensivelyprepared reform plans for various spheres ofsocial policy. Social policy was developed andembodied in legislation on both federal(Czechoslovak) level (the Federal Ministry ofLabour and Social Affairs) and national level(the Ministry of Labour and Social Affairs ofthe Czech Republic). Although cooperation

between the two ministries was not alwaysideal, from a political standpoint their positionand those of the respective governments werealways compatible. The work of these min-istries can be characterized as an effort tosystematically replace state paternalism byestablishing more resilient and decentralizedmechanisms that would be compatible withongoing economic reform. These mechanismswere to be beholden to the regulative and exec-utive powers of the state only where necessary.From the standpoint of the governments’prevailing political philosophy, this approachwas a combination of socio-liberal and social-democratic philosophies.

The ‘Scenario of Social Reform’, developedand passed at federal Czechoslovak govern-ment level, became the fundamental concep-tual document for reform of the social sector.A plan to create a universal and unifiedsystem of social welfare was adopted whichwould offer universal compulsory health andsocial insurance (complemented by voluntarysupplementary insurance for individuals orgroups), and means-tested state social assis-tance on condition that all alternative possibil-ities of welfare and assistance had beenexhausted, or in the event of a citizen’s inabil-ity to provide for himself or herself.

Czech social policy reform was based onthree basic components: first, active employ-ment policy; second, liberalization andpluralization of social welfare based on aBismarckian insurance system, that has beendeeply rooted in the history of the countrysince the end of the 19th century; third, thedevelopment of a social safety net for peoplein need.

Phase 2: retrenchment (July 1992–June 1998)1

Due to political changes in the second phase,neo-liberal policy gained favour in the CzechRepublic, characterized by placing emphasison economic reform; a declared, even legis-lated effort to limit the role and spending

254 Potucek

Journal of European Social Policy 2004 14 (3)



powers of the government in the sphere ofsocial security; and mistrust of the intermedi-ary role of civil-society institutions in formingand implementing social policy. This politicalagenda, embodied by the Civic DemocraticParty, was somewhat modified within thecoalition framework by parties that prioritizeda solution which left more room for stateintervention (the Christian Democratic Union–Czech People’s Party [KDU–CSL]) and to theactivities of civil-society institutions (the CivicDemocratic Alliance [ODA]). Therefore, theprevailing governmental political philosophywas a mixture of neo-liberalism and conser-vatism. The government was not enthusiasticabout joining the EU so that there were con-siderable gaps in the EU-accession effort ofthe country, reflected in the annual reports ofthe European Commission.

Phase 3: Social policy back on the political agenda (July 1998 onward)

The parliamentary elections, which took placein June 1998, resulted in the formation of aminority government by the Czech SocialDemocratic Party (CSSD). It based its policyon a proactive programme of civic participa-tion and education, and announced the need tocreate a long-term vision for the country. Thecore of government policy was the idea of asocially and ecologically oriented marketeconomy. Within this framework, all citizensof the country should be offered equal accessto education, work, and civil and personaldetermination. This was in sharp contrast tothe more or less residual social policy accentsimplemented by previous governments.Nevertheless, the implementation of such a

Accession and the Czech Republic 255


Table 1 Ratio of social and health system expenditures to GDP, Czech Republic (1990–2002)

Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Pensions-securitybenefits 7.3 7.4 7.6 7.3 7.2 7.7 8.0 8.6 8.8 9.1 9.2 9.0 9.2Sickness andmaternity benefits 1.4 1.2 1.2 1.2 1.4 1.3 1.3 1.2 1.0 1.0 1.4 1.4 1.4Unemployment andemployment policiesexpenditures 0.0 0.3 0.4 0.2 0.2 0.2 0.2 0.2 0.3 0.4 0.5 0.4 0.4Family allowances(state social support system) 2.1 1.9 1.8 1.4 1.5 1.4 1.8 1.7 1.7 1.6 1.6 1.5 1.5Social-care benefitsand social-servicessystem 0.9 0.6 0.8 0.8 1.0 0.8 0.8 0.8 0.9 1.1 1.2 1.2 1.3Others 1.4 2.7 1.8 1.3 0.9 0.6 0.1 0.2 0.1 0.1 0.1 0.2 0.2Administrationexpenditures 0.1 0.3 0.2 0.3 0.4 0.4 0.3 0.4 0.4 0.3 0.3 0.3 0.3Social-securitysystem expenditures– total 13.1 14.5 13.7 12.6 12.6 12.4 12.4 13.1 13.1 13.7 14.1 14.0 14.2Health-care systemexpenditures 4.8 5.2 5.4 7.2 7.3 7.3 7.1 7.2 7.2 7.2 7.3 7.4 7.6Social and health-protection system– total 17.9 19.8 19.2 19.8 20.0 19.7 19.5 20.3 20.3 20.9 21.4 21.4 21.8

Source: Ministry of Labour and Social Affairs, Czech Republic (2004).



government programme was seriously threat-ened by budgetary constraints caused by acutefiscal problems; legislative delays caused by theminority position of the government; insuffi-cient implementation capacity of the state; andthe protracted reform of public administration.The next general election in 2002 enabled theSocial Democrats to remain in power. Theyestablished a coalition government along withthe Christian Democrats (KDU–CSL) and asmall liberal party – the Union of Freedom(US). They operated with only a marginal (oneseat – 101:99) majority in Parliament. Indomestic policy issues, compromises betweenSocial Democratic, Christian Democratic andliberal concepts and approaches have hadto be found. Most outcomes of such difficultnegotiations resemble the centre-left recom-mendations well known from the contempo-rary British Labour Party. Both governmentshave developed a clear pro-European policyand speeded up the EU-accession preparatoryprocess. The referendum on joining the EU inJune 2003 revealed prevailing popular supportfor EU membership among the Czech popula-tion (turnout was 55 percent, and 77 percentof participating citizens supported the move).

What have been the consequences of suchprofound changes in political priorities,administration and delivery of social policyschemes on public expenditures?

One can identify only minor fluctuations.There is, though, a recognizable tendency ofliberal and conservative governments up to1998 to tighten total social-security systemexpenses, and the inclination of SocialDemocracy-led governments to be more gen-erous. The overall trend has been surprisinglystable, with a slight increase through time,but still well below the EU-15 average (seeTable 1).

Procedural changes

One of the most important social policy deter-minants is of course the economic environ-ment. The Czech Republic was in a position

where it had to pursue economic and socialpolicy reforms at the same time. As a result, itfaced a situation characterized by the need toapproach more extensive old and also newsocial problems induced by the economicreform with slender resources. This limited thespace and disposable resources for preventiveaspects of social policy, and interfered with theideologically induced reluctance towards theinstitutions and policies of the welfare statetypical in the early 1990s. The Czech case isinteresting in this respect as the real-worldsocial policy differed a lot from the preferredideal model. The original ‘Scenario of SocialReform’ was influenced by social-democraticand social-liberal ideologies. The Czech gov-ernments of 1992–98, with their mixture ofneo-liberal and conservative rhetoric, reserva-tions about EU enlargement, and centralist andetatist practical social policy, faced a problemin finding a way out of this trap.

Their solution was to fill institutionalshelves created at the beginning of transfor-mation with a rather different content, orleave them empty, as happened with the pro-posed corporative Social Insurance Fund. As aresult, many social policy institutions werepluralistic and corporatist in theory, but inpractice the state has preserved much of itsprevious power (e.g. the compulsory socialinsurance sector). Targeted, means-testedresidual schemes were introduced in someinstances (namely child allowance in 1995).This tendency, coupled with the drop in realincomes for the majority of the populationand abolishing most price and in-kind subsi-dies, weakened the disposable resources andsocial position of the social strata especially inthe middle of the socio-economic ladder.

The Social Democratic-led governments, inpower since the middle of 1998, have beentrying to re-constitute Czech social policy sothat it can fully suit the present and pros-pective social needs of the population inchanging domestic and global environments.The symbolic victory of the first of these overthe Thatcherist political resentments of theprevious Václav Klaus governments was ear-

256 Potucek




marked by Parliament’s acceptance of theEuropean Social Charter in Spring 1999. Oneexample of this genuine national initiative wasthe elaboration of the Social Doctrine of theCzech Republic. Its purpose was to build abroad national consensus concerning thefuture orientation, goals, priorities and corre-sponding instruments of Czech social policy.Five preparatory conferences, which wereorganized in 1998–2000, represented a ‘jointventure’ of the academic community as well asthe non-profit association Socioklub, theMinistry of Labour and Social Affairs and theCzech Senate (the upper house of the CzechParliament). The document, elaborated by thegroup of experts from various disciplines andwith various political affiliations, was men-tioned in the coalition-agreement statement ofpolitical parties in power in July 2002 as thestarting point for further development of thegovernment social policy, its priorities andapproaches for the period up to 2006. Ingeneral, Social Democratic-led governmentsrehabilitated the importance of programmaticwork based on basic values and principles,and re-emphasized social issues as toppolitical priorities – very much in accordancewith the corresponding European Unionapproaches and policies. This is the case eventhough, in an effort to cope with the chal-lenges of the economic, political, administra-tive and social aspects of transformation, bothSocial Democratic-led governments had toface severe budgetary constrains as well asinsufficient administrative capacities coupledwith impressive implementation skills. Post-poned reform of public administration is stillon the way, with the establishment of regionalself-governing units in 2000 and the reform ofthe central layer of administration envisagedfor 2005–06.

The Czech Republic has still a considerableway to go in becoming a consensual dem-ocracy of the Western European kind. Thiswould require governmental measures toencourage the results of public policy discus-sion to be widely published, presented, anddiscussed by all who would be affected by it.

As has already been indicated, the most pow-erful decisionmaker on social policy issuesremains the government. Nonetheless, unionsand associations of entrepreneurs participat-ing in the Council of Economic and SocialAgreement (created in October 1990 on thebasis of a voluntary agreement) have been themost significant partners of the government.Nowadays, trade union representatives andthe representatives of the business sector arerespected partners of the government, and thetripartite institution has deep roots in thepolitical fabric of the Czech state.

In addition, there are signs that the SocialDemocratic-led governments are more apt toinitiate and/or follow public discussions in theform of civil dialogue. Pars pro toto: theMinistry of Labour and Social Affairs intro-duced a new form of communication, called‘Social Conferences’. Representatives ofNGOs, experts and civil servants discussimportant issues (such as the regulatory rulesfor social assistance) at these conferencesbefore the Ministry and/or government takesthe final decision.

It should be noted that the European Unionhas played an active role as a supporter andmediator in the modernization of accessioncountries’ social policies, including the CzechRepublic. Its positive influence can be identi-fied in various fields. Remarkable has been theEU’s assistance: in institution and capacitybuilding (e.g. PHARE projects) in the develop-ment of the instruments of labour-marketpolicy; in the reform of social services; in thedevelopment of policies on human rights andequal opportunities (especially of and forminorities); in collaboration in the field ofeducation. Specifically designed projects havebeen launched to assist the modernization:reform of public administration; regulatoryreform; training of professionals (includingcivil servants); implementation of newmethods of public management and adminis-tration. Nevertheless, all this assistance wouldbear fruit mostly in the long run; its immedi-ate positive effects in improving the life of thepopulation were limited.





Substantive policy changes

As analysed earlier, the overall concept ofCzech social-policy reform was formulatedand most new social policy institutions wereestablished during the first years after 1989.They included compulsory health and socialinsurance, the tripartite Council for Economicand Social Agreement, regional LabourOffices (responsible for both passive andactive employment policies) and the stateguarantee of a minimum subsistence benefitfor every citizen.

As in other Central and Eastern European(CEE) countries, the economic transformationof the country was characterized by a drop inGross Domestic Product, and double-figureinflation rates, at the beginning of the 1990s.This was followed by a moderate GDPincrease in the mid-1990s and inflation ratesin single figures. Privatization and restructur-ing of the economy has continued, followedby a sharp increase in direct foreign invest-ment since 1999. The high unemployment ratehas become the persistent feature of the devel-opment after 1997.

Over this period, the most profoundchanges took place in social protection policy,the fight against poverty, and employmentpolicy.

Social-security policy after 1989

A universal and uniform system of social secu-rity was to become the core of the state’ssocial policy. After the victory of neo-liberaland conservative political parties in the elec-tions of 1992, liberal and residual tendenciesbegan to be asserted more forcefully in socialpolicy. The conception of social reform beganto impose limitations on social-security policy,and within this framework crystallized theconception of its three tiers or ‘pillars’: first,compulsory public social insurance, reactingto foreseeable situations in a citizen’s life, fol-lowing the pay-as-you-go principle; second,state social support, reacting to unforeseeable

social events, financed from general taxation;third, social assistance built on the principle ofaid to citizens who find themselves in anemergency situation, cofinanced by centraland local authorities, non-profit organizationsand clients themselves.

Compulsory social insurance Laws werepassed enabling the transformation to a newstructure of social insurance in 1992. Socialinsurance was to be compulsory, contributorsto the Social Insurance Fund being employees(they pay up to 8 percent of gross income, ofwhich 1.1 percent goes towards the sicknessinsurance scheme, 6.5 percent to the old-agepension scheme, and 0.4 percent to the stateemployment policy), employers (they pay upto 26 percent of the gross income of theiremployees, of which 3.3 percent accounts forthe sickness insurance scheme, 21.5 percentfor the pensions scheme, and 1.2 percent forthe state employment policy), and the state,which pays the insurance contribution forchildren, pensioners, parents on maternity orpaternity leave, the unemployed, invalids,soldiers and prisoners. In the case of self-employed persons it is 35 percent of anamount they fix themselves, but not less than40 percent of the income from self-employ-ment after the deduction of costs expended inits achievement, insurance and maintenance,2

and it cannot be lower than 20 percent of theaverage wage.3 Social-insurance contributionscover old-age pensions, invalidity pensions,widow, widower and orphan pensions, sick-ness contributions, contributions for the treat-ment of a family member, contributions to thestate employment policy, and administrationcosts.

In 1995 there was a significant legislativechange in the framework of the compulsorystructure of social insurance with the passingof a new law on old-age pensions. An increasein the statutory retirement age limit wasapproved to be introduced incrementally upuntil 2007. The statutory retirement age forwomen, originally 53–57, was raised to 57–61(the actual limit depends on the number of

258 Potucek




children), while for men it increased from 60to 62. The law on base pension insurance con-ceives the old-age pension as comprising twocomponents, made up of a fixed amount paidto all and one that is dependent on thenumber of years worked and the workingincome received; the law is built on the princi-ple of a substantial redistribution of accumu-lated finances towards persons with a lowerlevel of earnings. Old-age pensions for personswith higher working incomes are affected by aregressive calculation formula.

Under the new law the pension as a propor-tion of the gross wage will drop by the year2010 to 38 percent and in 2015 to 35 percent.Thus the government has managed to setdown a very residual conception of old-ageinsurance that differs considerably from conti-nental European practice and does not ruleout the possibility of the pension falling belowthe living minimum level. Moreover, it is asystem the conditions of which, as well as themanagement of gathered resources, are fullyin the hands of the Ministry of Financeinstead of an independent public corporation– Social Insurance Fund (see Table 2).

Public-sector compulsory social insurance iscompletely dominant in the Czech system ofold-age pension insurance. Nevertheless, addi-tional voluntary private pension insurance,based on an individual contract between thecitizen and the insurance company, is attract-ing a rising number of clients. The state con-tributes a defined sum of money as well. If theconception of a drop in the ratio of the old-age pension paid within the public system tothe average wage comes about, the more well-off groups of the population will be forced tomake more use of the private sector in orderto increase their old-age pensions.

Since 1995 there has been a public discus-sion about the reform of the whole concept of

the old-age pension system. It was initiated bysome experts from the International MonetaryFund and the World Bank, who strongly rec-ommended the adoption of compulsoryprivate co-insurance. This new type of old-ageinsurance would complement the pay-as-you-go public scheme that would gradually lose itsimportance in the total amount of redistrib-uted resources. It was argued that this changewould be inevitable due to demographictrends (ageing of the population) and thedemand for investment in the nationaleconomy that would be satisfied by the newlyestablished and privately run for-profit pen-sion funds. In contrast to Poland, Hungary,and recently Slovakia, which introduced thismodel, the Czech Republic resisted the pres-sure. There were two main factors that couldexplain this significant difference:

• The country was not in a deep fiscal crisisas were other CEE countries, so that it wasless dependent on loans provided by theseorganizations.

• There were strong political opponentsof this idea, namely consecutive SocialDemocratic-led governments and the tradeunions, who stressed the risks of such areform due to the fragility of financialmarkets and institutions and the hugedemand for additional financial inputsduring the couple of decades after such areform is introduced.

At the beginning of the 21st century, theCzech government now adheres to the ideaof introducing a Swedish-like defined con-tribution pay-as-you-go system. Right-wingtheorists, politicians and the representatives offinancial-market institutions support the ideaof compulsory private co-insurance, whereasleft-wing theorists, politicians and trade



Table 2 The replacement rate of average old-age pension and average gross wage

Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Ratio % 50.4 52.7 57.4 52.0 47.0 44.4 43.8 43.5 45.3 45.9 45.2 43.8 42.9 43.1 (41.8)

Source: Ministry of Labour and Social Affairs, Czech Republic (2004). 2003 – estimate.



unions are in favour of voluntary non-profitco-insurance schemes (with the financial con-tribution of both employees and employers).There have been several (up to the beginningof 2004 unsuccessful) attempts to create aspecial institutional platform for the steeringand moderation of the public debate about thereform that would overcome ideological, par-tisan and other barriers among various stake-holders.

State social support This system of socialsupport was introduced in 1995. The institu-tions responsible for state social support arethe social departments of district authorities,and benefits are paid from general taxation.Within this system, all benefits are defined asthe fixed multiple of the subsistence minimumlevel.

Means-tested benefits subsume child allow-ance (paid up to the age of 26 where the childis training for a future occupation), socialcontribution (to low-income individuals andfamilies), housing benefit, and transportbenefit (for children training for their occupa-tion away from their permanent residence).Categorical benefits (provided without regardto income) comprise parental allowance (paidto a parent looking after a child up to fouryears old), maintenance contribution (for thefamily of a soldier doing military service orthe alternative form of civil service), benefitfor foster-parent care, birth allowance, andburial benefit.

One of the most important system changeshas become the method by which benefits areawarded to children. Up to 1995, child allow-ance was paid to all families with dependent

children without regard to their income. TheState Social Support Act introduced a newmeans-tested method tied to the familyincome not exceeding three times the sub-sistence minimum. The Social Democratic-ledgovernments have long wished to switch backto universal (categorical) child allowance, buthave been unable to reintroduce it due topolitical resistance from coalition parties, theopposition and fiscal constraints. The realpurchasing value of child allowances and taxcredits have decreased considerably since1989 (see Table 3).

Social assistance The structure of socialassistance is conceived as a ‘lifeline’ to thosewho are no longer able to help themselves,have no claim to benefits in the framework ofthe social insurance and state social supportstructures, or who find these benefits are notenough to sustain them to at least the levelofficially set as the subsistence minimum.Social aid is provided in cash or in kind orboth.

The new laws began to influence the livingconditions of people in need at the beginningof the 1990s, namely the Act on the livingminimum and the Act on social need (whichhas been amended several times). Theyincluded the obligation of the state to guaran-tee all citizens that their standard of livingwould not fall below the official subsistenceminimum, and to make up the differencebetween the actual income of an individual orfamily and this limit on condition that he/she(they) cannot him/herself (themselves) increasethis income by his/her (their) own endeavoursbecause of age, health status, or other legiti-

260 Potucek


Table 3 Drop in public support for families with children (child allowances and tax credits), CzechRepublic (1989–2002)

Type of family Drop in public support in 2002(compared to 100% in 1989)

Family with 1 or 2 dependent children 27%Family with 3 children 35%Single-parent family with 1 child 45%

Source: Hirsl (2003).



mate reasons. The law in question has thusdelineated a socially accepted poverty limit,establishing the right to aid from the stateunder certain circumstances. It is a schemebased on the individual assessment of totalincome, property and social relations of theapplicant. The defined subsistence minimumdiffers according to age and structure of thehousehold. The law entrusted the governmentwith increasing the level of the living mini-mum in accordance with changing costs ofliving, and with maintaining the ratio betweenthe level of the living minimum and theaverage income.

The government conception of social assis-tance in the Czech Republic thus issues fromthe principle of subsidiarity: the individual isresponsible first, then the family, charities, themunicipality and, at the end of the line, thestate. A new Act on Social Assistance has beenin preparation since 1994, but without finalsuccess.

Incidence of poverty

The situation of full employment, largeincome levelling and relatively generous aid tofamilies with children was reflected in the lowpercentage of truly poor people under social-ism. Even though the transformation of theeconomy has changed and is still changing theeconomic situation of most individuals andhouseholds, the situation has been kept undercontrol, in part by making use of the mostvaried socio-political measures, such as thealready-mentioned introduction of the insti-tutions of subsistence minimum, minimumwage, the adjustment of the amounts of old-age pensions with regard to inflation, and thepayment of unemployment benefit.

The Ministry of Labour and Social Affairsis responsible for monitoring the occurrenceand trends of poverty in the Czech Republic.It can be said that the rate of poverty in theCzech Republic has remained relatively low.In the case of the Czech Republic the follow-ing indicators can be used:

• The officially set subsistence minimumlimit. For a single-person household, itrepresents CZK4,100 per month ($9.7 perday by PPP). According to the results ofthe ‘Social Situation of Households’ surveyof the Czech Statistical Office, imple-mented with the Eurostat regulation, theincomes of 3.4 percent of households and4.3 percent of persons were below the sub-sistence minimum in 2001.

• The relative poverty indicator used by theEuropean Union. Households find them-selves in the poverty belt if their incomeper head drops below 60 percent of theincome median of an equivalent adultperson. Below the above-defined povertyline there were 7.6 percent of the popula-tion in 1996 and 7.92 percent of popula-tion in 2001 (Ministry of Labour andSocial Affairs, 2003).

An inevitable part of the transformation is thedifferentiating process regarding incomes ofthe population. Two facts lie at the heart ofproblems relating to this issue. First, the dif-ferentiation of incomes does not occur in linewith an increase in the living standard of themajority of the population (as is the norm indeveloped countries), but rather during adecrease of the average living standard and anabsolute and relative shift of income to high-income groups. The share of the richest quin-tile of the economically active population onthe total sum of incomes increased from 30.9percent in 1988 to 37.8 percent in 1996. Inthe same period, the ratio between the lowestand the highest household income decile in-creased from 2.6 to 3.2 in the Czech Republic(Vecerník, 1997). Second, the criteria used asthe base for differentiation are not accepted inmost cases by society as being just. The mostthreatened groups of the adult population arethe unemployed, invalids and citizens withonly elementary education. Families withdependent children in general, and children inparticular, also belong to population groupswhich run a bigger risk of falling into poverty.Those most at risk are thus families with





unqualified workers and with dependent chil-dren. Winners of the changes are the membersof the economic and political elite, those whohave profited from the privatization (eitherlegally or by ‘channelling’ public and/or cor-porate funds into private hands) and employ-ees of multinational firms whose Western-levelsalaries represent multiples of the averagelocal wages.

Employment policy and unemployment

The Employment Act came into force at thebeginning of 1991. The state employmentpolicy, in accordance with this Act, is towardsachieving a balance between supply anddemand for labour, towards the productiveutilization of the workforce resources, andtowards securing the rights of citizens toemployment. This is interpreted as the right ofthose who want and are able to work and areactually engaged in the process of applying forwork. These persons have the right to themediation of work in a suitable position, tothe requalification necessary for their work,and to material security before startingemployment and in the event of losingemployment. The network of regional LabourOffices was created to administer stateemployment policy in the regions. Besideslocations in individual regional capitals, therewere established branch offices in the largertowns of a region. This means that their serv-

ices became relatively easily accessible to job-seekers throughout the Republic.

The attention paid to active and passiveemployment policy has fluctuated significantlyover the years according to the political orien-tation of the consecutive governments, withthe right-wing orientation more in favour ofpassive policies, and the left-wing orientationsupporting active employment policies (seeTable 4).

Employment policy is financed by the con-tributions of employers, employees and thestate (on behalf of the economically inactive).The minority Social Democratic governmentlaunched (and Parliament accepted) the firstNational Programme of Employment at thebeginning of 1999.

The development of unemployment Thefigures below (Table 5) are based on thenumber of unemployed people seeking work atthe Labour Offices – the so-called ‘registeredunemployed’. Unlike in other CEE countries,the Czech Republic was able to keep unem-ployment very low up to 1997, especially dueto a specific ‘Czech-style’ voucher privatizationthat did not exert hard pressure on economicrestructuring leading to higher productivityand efficiency of newly privatized enterprises.Since the economic crisis in 1997, associatedwith devaluation of the local currency (Czechcrown) and a series of bankruptcies of bigbanks and enterprises, unemployment has beenrising very considerably.

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Table 4 Expenses on active employment policy as the percentage of all expenses on employmentpolicy, Czech Republic

Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

% 31 55 35 28 26 21 14 18 25 37 43 44


Table 5 The official rate of unemployment in the Czech Republic (in %), 1990–2003 (end of the year)

Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

% 0.7 4.1 2.6 3.5 3.2 2.9 3.5 5.2 7.5 9.4 8.8 8.9 9.8 10.3




In the past few years figures have alsobecome available gathered by the CzechStatistical Office on the basis of representativesample surveys of the population. Thesenumbers show a systematic difference in adownward direction, indicating that the realrate of unemployment is actually about 2.5percent lower than the official figures in 2003.

A specific problem of many countries islong-term unemployment, i.e. the proportionof those who have been in unemployment forover 12 months. Their relatively low share –not more than 20 percent of all unemployedup to 1996 – has considerably increased afterthat, reaching the level of nearly 40 percent inthe beginning of the 21st century. With peopleunemployed between six and 12 months, thepool of long-term unemployed represented 56percent of all unemployed people in 2002.The risk of the occurrence of long-termunemployment is higher for those who aremore afflicted by unemployment as such: theunqualified, single mothers with children,Roma, and people with disabilities. Detailedstudies indicate that the long-term unem-ployed in the Czech Republic do not yet showa strong tendency towards becoming an‘underclass’, with this being particularly ab-sent in the rural areas. There is a considerablerisk, however, that in the future there willemerge an uprooted underclass among thelong-term unemployed Roma, homeless, andunqualified young people who have neverworked.

‘Factor EU’: the Czech Republicbetween the Copenhagen criteria and the Lisbon Strategy

More than ten years’ history of preparation ofthe Czech Republic for accession started withthe launching of the Copenhagen criteria ofaccession (1993). Like all the other candidatecountries, the Czech Republic was asked toreform its national economy to be able tocompete – and to become compatible – with

market economies of the existing memberstates. It had to build robust and reliable insti-tutions of political democracy. It was asked toadjust its legal and administrative system tothe ‘acquis communautaire’. These criteriahave been designed more as a technical (eco-nomic and political) instrument from abovethan as an appropriate tool to steer people’sliving conditions in the candidate countries:legal, economic and political issues prevailed(see also Ferge and Juhász, this issue). Theprogress in adjustment to these requirementshas been fast and considerable. Nevertheless,genuine social goals were at the bottom of thelist of priorities – limited to the preservationof individual human rights, and buildingsoftly defined framework for social policymaking. The containment or reduction ofpoverty and income inequalities, labour rights,a living wage and the alleviation of the fate ofmarginalized groups, in other words, the fightagainst social exclusion, did not form an inte-gral part of the reform agenda.

As late as 2000, the European Union passedits Declaration of Nice and launched itsLisbon Strategy. Both documents representeda new political initiative, rehabilitating theimportance of human resources, quality oflife, social cohesion, in short, ‘social fabric’ ofcontemporary societies. Only in 2002, whenthe preparation of the new member states –organized within the logic of the Copenhagencriteria – to enter the EU had just finished, theLisbon Strategy was presented to them as astrategy they should also adhere to. Thus,social policy moved to the top of the EU polit-ical agenda of enlargement as late as nearlyone decade after setting up the Copenhagencriteria of accession.

In the meantime, neither the governments ofthe new member states nor the EU institutionswere able to prevent the rent-seeking institu-tions of the global financial market, inspiredby the influential ideology of the WashingtonConsensus and the corresponding policies ofthe International Monetary Fund and theWorld Bank in the 1990s, to grasp the oppor-tunity window and try to implement radical





changes in various fields of social policy. Notthe European Union, but the World Bank isidentified as the most influential regionalagenda-setting actor in economic and socialpolicy making in the region (Ferge and Juhász,this issue; Orenstein and Haas, 2002).

What has been the specific impact of thisinterplay of influences on the social situationof the Czech Republic? Let us sum up themain discrepancies between the goals of the

Nice Declaration and the Lisbon Strategy onthe one hand, and the real – in many aspectsdivergent – developments of the living andworking conditions in the Czech Republicduring the transformation period on the otherhand (see Table 6).

The time gap between setting the Copen-hagen criteria (with a clear priority given toeconomic, political and legal conditions ofaccession in 1993) and accepting the Nice

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Table 6 Czech Republic between the Copenhagen criteria and the Lisbon Strategy

Goals to fight poverty and social The development of social Political instruments used orexclusion of EU Nice Declaration conditions of everyday life in the needed to achieve the goals ofand the Lisbon Strategy, applied Czech Republic after the launch EU Nice Declaration and theto the Czech Republic in 2002 of the Copenhagen criteria (1993) Lisbon Strategy

To provide more and The drop in total employment: Since 1999, Nationalbetter employment 4,848 in 1993, 4,746 in 2002 Employment Plans have been

implemented on a yearly basis.The sharp rise of unemployment There was signed a joint Czech–rate: 3.5% in 1993; 9.8% in EU document evaluating2002 priorities of employment

policy in 2000

To ease access to resources, Some (but still mostly marginal) Policy of equal opportunitiesrights, goods and services for all health and social services provided was launched by the Czech

free of charge in the beginning of government as a priority in the 1990s were recommodified. 2001. The method of main-

streaming has been applied

To prevent the danger of Increasing numbers and shares Czech–EU Joint Inclusion social exclusion of marginalized people (e.g. Memorandum on Social

homeless, unemployed) Inclusion was signed in 2003

The first National Action Planof Social Inclusion to be submitted in 2004

To help the most vulnerable Relative economic position of As abovewomen and families with dependent relatives – mostly children – has deteriorated

To mobilize all responsible Political neglect of issues of social A new, specific set of policies,institutions inclusion. Czech Republic’s supported by the reallocation

government ideology (1992–97): of necessary human resources‘. . . market is the best remedy to and financial means, is neededall illnesses of the communism’ to cope with the identified

systemic tension in aneffective way



Declaration and launching the Lisbon Strategy(with a clear shift of priorities towards employ-ment, education and social cohesion as thenecessary preconditions of economic competi-tiveness) for the accession countries in 2002implies that the new member states will enterthe European Union with the persistent socialdeficits not enabling them to cope with thedemand of the latter in a satisfactory way. Themain challenge of accession will be to try tosolve this discrepancy – or to expect the con-siderable failure of the Lisbon Strategy in theregion, and further aggravation of living con-ditions for many members of their societies.

Conclusions

In studying social policy transformation inCEE member states, one can identify a sur-prisingly broad set of different conditions andreactions to processes of globalization andEuropeanization. What are the specific fea-tures of the post-totalitarian social policydevelopment in the Czech Republic?

The concept that explains most of what hashappened in the country between the fall ofCommunism and EU enlargement is theconcept of institutional and behavioural pathdependency (Korpi, 2000; Manning, thisissue). Indeed, the country does exhibit typicalfeatures of strong adherence to the continental– or even more specifically, Bismarckian –corporatist, achievement-type welfare state. Itstems from its modern history and has beenrevitalized even after more than four decadesof etatist bureaucratic collectivism (Deacon,1993). It has an ideological footing in the con-siderable tradition of social thinking (TomásGarrigue Masaryk, Karel Englis and others),in an old tradition of social-democratic move-ment (the Czech Social Democratic Party wasfounded as early as 1878 and was able tosurvive in exile throughout the whole periodof Communist rule) and in the prevailing egal-itarian mood of the public. It has much incommon with the neighbouring German andAustrian welfare states – including the institu-

tional and attitudinal resistance to change.The Czech Republic belongs to the ‘recoverygroup’ of post-Communist countries sensuManning (this issue).

We can derive this hypothesis from studyingrecent developments in social-security institu-tions and schemes of delivery, labour-marketpolicies, and health care. We may also under-pin it by analysis of welfare expenditures,which have fluctuated only slightly up anddown in accordance with the ideology of thepolitical formation actually in power (seeTable 1). It should be mentioned that due tothe proportional electoral system, Czech gov-ernments are generally weak and unable todesign and push through any ‘radical’ reform.

External factors shaped the nature of theCzech welfare state as well, but to a muchlesser extent. The most influential has beenthe impact of economic globalization, associ-ated with the formation of a market economyin the country. Requirements executed andsupport provided by the European Union havebeen important, especially in institutionalcapacity building: they will have a long-termpositive impact on the structure and quality ofsocial policies and services. In programmaticterms, there has been an important recentchange of priorities embodied in the LisbonStrategy.

The future development in the country mayadhere to two scenarios: ‘race to the bottom’and ‘catch up’ (Kvist, this issue). The formerrelies exclusively on the Open Method ofCoordination. This instrument would be, nev-ertheless, too weak if confronted by the enor-mous public tasks of fighting unemployment,capacity building in health and social services,alleviation of poverty, and strengtheningsocial cohesion in order to secure the imple-mentation of the Lisbon Strategy in thecountry by 2010. The latter would presume anew large-scale political initiative, supportedby the comprehensive set of specific publicpolicies, and by the reallocation of necessaryEU financial resources that could help to over-come the identified endemic and systemictension between the requirements of the





Lisbon Strategy and the real living andworking conditions in the country. In otherwords: a new, specific set of policies, sup-ported by the reallocation of necessary humanresources and financial means, is needed tocope with the identified systemic tension in aneffective way (see Table 6, bottom right).

The future enlargement will be a unique oneas it represents the attempt to merge two dif-ferent cultures (Schöpflin, 1999). It is a histor-ical chance and a necessary step from whichboth sides will profit in the long run, but onlyif implemented with care and in the light ofdeep analytical insight and wise policy advice,for the enlargement will bring about tempo-rary problems and societal stresses on bothsides. Future development in Central andEastern Europe will very much depend on thesolution of the internal dilemma of anenlarged European Union: should priority begiven to the immediate economic profit and/orpolitical feasibility or the long-term goal toenhance (social) quality of life for all?

Notes

1 In 1992, Czechoslovakia split into the CzechRepublic and the Slovak Republic.

2 In 2004. For 2005 and 2006 the basis will be45% and 50% respectively.

3 In 2004. For 2005 and 2006 the basis will be22.5% and 25% respectively.

References

Deacon, B. (1993) ‘Developments in East EuropeanSocial Policy’, in C. Jones (ed.) New Perspectiveson the Welfare State in Europe. London and NewYork: Routledge.

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Korpi, W. (2000) ‘Contentious Institutions: anAugmented Rational-actor Analysis of theOrigins and Path Dependency of Welfare StateInstitutions in the Western Countries’, SwedishInstitute for Social Research, SOFI WorkingPaper 4/2000. Stockholm: Stockholm University.

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Potucek, M. (2001) ‘Czech Social Reform after1989: Concepts and Reality’, International SocialSecurity Review 54 (2–3): 81–105.

Potucek, M. and Radicová, I. (1997) ‘SplittingWelfare State: the Czech and Slovak Cases’,Social Research 64 (4): 1605–43.

Schöpflin, G. (1999) The Prague Conference on EUEnlargement 1999. A Foreword. Prague: TheBritish Council.

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