The Czech Republic: Industrial relations background
There is a growing interest in industrial relations and general employment developments in central and eastern European countries, particularly those which are expected to join the European Union in the medium term. In the light of this, our occasional series examining the industrial relations background in individual countries looks this month at one of the "fast-track" applicant countries - the Czech Republic.
This feature is based on material and research carried out by Anna Pollert, Research Fellow, Industrial Relations Research Unit, University of Warwick.
Industrial relations in the Czech Republic have undergone something of an upheaval over the past decade as the transformation is made from a planned to a market economy. Notable characteristics of the Czech system include a two-tier system of bargaining - at industry and at company level - and the regulation of basic employment rights by means of a Labour Code. Although the country is currently in something of a state of flux and the economic climate is at present uncertain, unemployment is comparatively low, albeit rising.
Trade unions - historical development
The Czech lands were traditionally one of the most highly urbanised parts of the Austro-Hungarian empire, providing 70% of its industrial capacity and an organised working class. The state of Czechoslovakia, created by the unification of the Czech and Slovak lands at the end of the First World War, differed from other inter-war countries of central and eastern Europe by establishing a parliamentary democracy in which the organised labour movement grew and gained considerable rights. However, the trade unions were fragmented by nationality, political party and craft. In 1937 there were 18 trade union centres organising 485 unions and a further 224 unions unconnected to any centre. Under Nazi occupation during the Second World War, this system was obliterated by the forced amalgamation of all existing trade unions into the state-controlled National Federation of Employees in 1941. However, in 1943 the underground resistance within the federation illegally created an alternative, the URO (Ustrední rada odborÞu, the Central Trade Union Council). This was the precursor to the Communist ROH (Revolucny Odborové Hnutí, the Revolutionary Trade Union Movement), which was formed when the war ended. The URO and the Communist Party gained popular support in building broad, unified organs of resistance in which they took control.
After the 1948 Communist Party takeover of Czechoslovakia, the ROH followed the Soviet "socialist emulation" model, with trade unions as political "conveyor-belts" and disbursers of welfare and recreation benefits. Czechoslovakia remained one of the most prosperous countries of central and eastern Europe, and despite a workers' revolt in Plzenv in 1953 (which was quickly neutralised), workers' compliance was bought by material concession, so the legacy of the uprisings experienced in Hungary and Poland was not felt until later, in the "Prague Spring" of 1968.
After the Warsaw Pact occupation, events such as strikes, demonstrations and workers' council factory occupations were repressed. Following systematic persecution of dissidents, "normalisation" was imposed for the next 21 years.
After the "Velvet Revolution" of 1989, a peaceful union transition was organised by a coordinating body formed out of the 6,000-odd strike committees set up during the General Strike of 27 November 1989, which had helped to overthrow the communist regime. In March 1990, with the backing of strike threats from large factories, an All-Union Congress abolished the ROH and established a democratic Czechoslovak Confederation of Trade Unions (CvSKOS), in which a CzechMoravian and a Slovak chamber were created in April (CvMKOS and KOZ-SR). A separate entity, which became a shareholding company (G.E.N a.s) in 1994, took over the distribution of ROH assets between the confederations and the unions.
International connections
In May 1990, CvSKOS joined the ICFTU and, in December 1991, it was granted observer status with the ETUC. After the separation of the Czech and Slovak Federative Republics in January 1993, both the ICFTU and the ETUC recognised CvMKOS as the Czech successor to CvSKOS at the end of that year. In December 1995, CvMKOS became a member of the ETUC, and in 1996 it joined the Trade Union Advisory committee to the OECD. Both CvMKOS and individual trade unions have international contacts with international trade union organisations and union industry secretariats.
MAIN INDUSTRIAL RELATIONS ORGANISATIONS
Trade unions
Because of the straightforward way in which the old unions were overhauled, the union structure in the former Czechoslovakia was more unified than in countries such as Poland and Hungary, where rivalry between competing "independent" and "reformed" old unions served to fragment post-communist trade unionism. CvSKOS became the largest union body, consisting of a total of 63 member organisations - 21 federal, 20 Czech-Moravian and 22 Slovak unions on industrial or occupational lines. By 1992, this had been rationalised to 40 trade unions, representing 4,015,677 members. Other minor associations included: a 14-union, 100,000-strong Confederation of Art and Culture (KUK); a 50,000-strong Trade Union Association of Bohemia, Moravia and Slovakia with old Communist Party leanings; a Christian Democratic grouping; and, as in several other countries in central and eastern Europe, autonomous unions for particularly powerful groups such as train drivers. After 1993, CvSKOS split into two separate national union confederations - CvMKOS for the Czech Republic and KOZ-SR for Slovakia.
By 1997, the largest unions were: the metal workers' union (OS KOVO) with 459,736 members; the teachers' and education workers' union (173,259); the railwaymen's union association (114,356); the miners', geology and oil workers' union (100,804); and the building workers' union (86,675). Most unions are medium-sized, such as the union of workers in woodwork, forestry and management of water supplies (767,006); the union of health services and social care (65,372); the union of postal, telecommunications and newspapers (63,528); the textiles, clothing and leather workers' union (60,523); the chemical workers' union (53,102); the union of food and allied trades (48,069); the general union, UNIOS (43,522); the shopworkers' union (40,657); and the union of transport (36,657). There are also several small unions, such as the union representing teachers in higher education (18,138); a union for hospitality, hotels and the travel sector (6,069); the fire fighters' union (6,284); the police (4,023); and several even smaller unions.
Unionisation and membership
Unionisation levels have drastically declined from the near 90% membership of the communist era. In 1995, 36 unions were affiliated to CvMKOS, with a total membership of 2,627,057, including retired workers. By 1998, CvMKOS membership had dropped to 30 unions and 1.5 million members.
On average, membership density in the Czech Republic is currently between 37% and 40%. There is a growing non-union sector, as well as declining membership in the unionised sector. Structural change means that employment in the formerly well-unionised large, state enterprises has been superseded by poorly organised small and medium-sized firms (employing 25-500 workers). In 1996, almost half of all employees worked in medium-sized firms, a third in small companies, and below one-fifth in large enterprises. Between 1994 and 1996, there was a 10% drop in union density in medium-sized firms and a 5% fall in large enterprises, while in small firms, membership levels of 16.2% dropped further to 14.6%, not only due to the advent of new, non-union firms, but because non-membership levels doubled from 5.7% to 10.3% in unionised firms. Membership in the state sector is now equal to the levels seen in privatised companies - around 37%-40%.
Although opinion polls have found that workers no longer distrust unions because of their discredited political past, and now regard them as important providers of protection at work rather than mere organisers of welfare and holidays, unions are failing to recruit new workers - around 70% of members are aged over 40 and fewer than 7% of members have been recruited since 1989. Retention, however, revolves around the same issues as elsewhere in Europe: traditional workplace defence and pay. In times of social upheaval and change, workers also join the unions for campaigns over pay, social issues and trade union rights. Poor information and communication may be partly responsible for falling membership, but the low priority given to recruitment also appears to be a key factor.
Employers' organisations
No employers' organisations existed under the Communist regime. Following the 1989 Velvet Revolution, three were formed:
Other associations were subsequently formed, such as the Council of Guilds, the Federation of Iron and Steel, the Federation of Entrepreneurs in the Aviation Industry, together with some associations formed on a regional basis, such as the Association of Industrial Enterprises in Moravia and Silesia, the Union of Bohemian and Moravian Consumer Cooperatives and the Bohemian and Moravian Agrarian Union.
The membership of these associations is allegedly patchy, with tensions between, as well as within, them (for example, certain tensions are said to exist between managers and entrepreneurs). In addition, foreign multinational companies tend not to join these organisations.
Employers' organisations are affiliated to two main confederations - the Confederation of Employers' and Entrepreneurial Union CR, and the Union of Employers' Unions - which are both represented at the tripartite national level.
Tripartism
As in Hungary, Bulgaria, and, later, Poland, consensus-building tripartite institutions were encouraged by the ILO in the then Czechoslovakia. In October 1990, a national tripartite council, the Council for Economic and Social Agreement, was established at federal and republic levels; after 1993 these separated into Czech and Slovak bodies. The Council was made up of 21 members divided equally between the Government, unions and employers. Thus, it comprised seven government ministers (including the prime minister and minister of finance, also the chair), seven trade union representatives (six elected by CvMKOS and one by KUK, with the other unions too small to be represented on the basis of roughly one representative for every 600,000 union members), and seven members of the Council of Business Associations of the Czech Republic (KORP), which brings together the large business associations, the private entrepreneurs and the others mentioned above. Regional tripartite bodies arose spontaneously in 1992, especially in declining economic areas, such as northern Moravia and Ostrava, but with no formal links with the national tripartite structures.
The Council for Economic and Social Agreement had an advisory, consultative function only, with no legal status. The main purpose of the Council was the negotiation of an annual General Agreement, a statement of intent on economic and social policy. During the 1990s, however, the negotiation of General Agreements became increasingly difficult due to disagreement on a variety of subjects. In December 1990, tripartite bargaining stumbled over the Act on Collective Bargaining (see below), with the loss of union co-determination rights featuring as a particularly contentious issue. Since then, it is the level of the minimum wage which has been the major source of dispute.
The Council came under increasing strain following the 1992 election victory of the conservative Civic Democratic Party (ODS) under the leadership of Prime Minister Vaclav Klaus. The Government used its constitutional right to override the General Agreement, including the renewal of tight wage regulations, against the wishes of unions and many employers, and failed to honour the 1993 General Agreement and legislate to extend industry-wide agreement to enterprises which were not themselves signatories to them. The unions thus refused to sign the 1994 General Agreement until a compromise was reached, giving limited extension of branch agreements. Similarly, a compromise was negotiated over threats to remove civil servants and other public sector employees from union representation rights. By 1995 it was clear that the Government was becoming increasingly keen to dismantle the tripartite structure and to withdraw from future ones. The 1994 General Agreement was the last one signed; after this, there was failure to agree, the interval between meetings of the tripartite bodies became longer and longer and they lost any operational value, as the Government sent low-level officials without the authority to make decisions.
However, after 1997, faced with deepening crisis and under pressure from the social partners and strike threats from deepening union disaffection with falling real wages and failures of the reform process, the Government reinstated tripartism. The new tripartite body, established in the autumn of 1997, is the Council for the Economic and Social Accord (RHSD), with the same scope as its original forerunner. It comprises four bodies: the plenary session, which meets every two months, composed of the Government, unions and employers, each with seven representatives; the presidium of the Council (the executive); working groups to discuss individual subjects, comprising nine members at most; and the secretariat of the council, which is responsible for administrative issues.
Collective bargaining and pay determination
The Czech Republic is bound by international conventions, in particular ILO conventions on human rights and basic freedoms (ratified by Article 10 of the Czech Constitution), which enjoy priority over domestic law. Labour relations are otherwise mainly regulated by the Labour Code, which forms the basis of court decisions. Although these are not strictly a source of law - as with custom or case law in some countries - in practice, decisions taken by courts, especially appeal courts and the Supreme court, are taken into account in lower courts' interpretation of the law. Certain groups of employees are subject to specific regulations (including judges, state prosecutors, members of the armed forces and those involved in the performance of public office).
The Labour Code governs relations between employers and employees, via their trade unions, and sets legal provisions for social dialogue. This embraces co-decision-making, consultation, information from employers to trade unions, monitoring by the trade union of organisations' adherence to the Labour Code, and unions' rights to stop work in cases of faulty equipment or processes which could endanger life or health. However, ultimate enforcement and sanction for breaches of this social dialogue legislation is via the lengthy court procedure, which inhibits challenging infringements in practice. The Labour Code, which dates back to 1965 and has been amended many times, is now being completely redrafted.
Collective bargaining is governed by the Act on Collective Bargaining (Zákon o kolektivním vyjednávání) of February 1991. Two levels of collective agreement are possible: the higher-level, industry-wide, agreement between employers' associations and unions; and company-level agreements between parties as defined by the Act on Collective Bargaining1.
Higher-level industry agreements are binding upon those associated with the signatories, ie employers which are members of employers' associations and union organisations which are affiliated to the higher union bodies which conclude the agreement. Industry-level agreements need no company-level ratification in order to apply at the lower level and they cover both union members and non-members. In theory, the Ministry of Labour and Welfare can extend an industry agreement to make it binding upon employers who are not members of the relevant employers' organisation, providing they are "pursuing similar activities under similar economic and social conditions" (Art. 7 of the Act). However, proving the latter condition is open to wide interpretation, a fact which weakens enforcement. Industry agreements normally run for two to three years, with the exception of the wage provisions, which run for one year.
In 1997, 29 industry agreements were signed in the Czech Republic. However, because of poor participation and organisation of employers' organisations, industry-level bargaining is a weak form of regulation, setting only minimal working and social conditions. In addition to the declining number of industry collective agreements, the practice of their extension to other employers has also declined - in 1993, the coverage of such agreements was extended to 191 employers beyond the scope of relevant employers' federations, but, by 1995, this had fallen to only 12, and by 1996 the practice was entirely abandoned.
Most bargaining occurs at the decentralised, enterprise level. Strictly by law, company-level collective agreements are supposed to neither undercut the provisions of industry-level agreements, nor improve upon them beyond "an allowable maximum" (Article 4(2)). In practice, however, company collective agreements can offer workers improvements, especially in terms of pay, on top of the basis provided by the industry agreements.
The Act on Collective Bargaining contains a union recognition clause in giving unions the "entitlement" to bargain; thus, in an organisation which already has a union present from the past (for example, privatised former state enterprises), the union is entitled to initiate bargaining, and the other party must respond "without undue delay" and enter bargaining (Art. 8(2)(3)). But although the employer must agree to bargain, there is no legal obligation to come to an agreement. Where there is no union present, it is much harder for unions to establish recognition for bargaining purposes if the employer is opposed.
Where collective bargaining is in place, wage negotiation is conducted annually, and all workers are covered by the agreement. Unless specified otherwise, the agreement is binding for a year, and renewed bargaining to conclude a new agreement should begin at least 60 days before the expiry of the previous accord (Art. 8(40)). This law has been stretched on occasion, as, for example, during a dispute at the state railways organisation when the employers refused to sign the new agreement in November 1996, claiming that the validity of the 1996 agreement could be extended until March 1997.
Although annual agreements specify the percentage rate of pay increases over the previous year, actual company pay determination is highly varied; in some enterprises, there are new pay grading systems, but individual appraisal by middle managers and supervisors is an increasingly common phenomenon across all occupations, including blue-collar workers. This practice coheres with "new" HRM precepts of individualising the employment relationship, but in fact follows the communist legacy, which gave great discretion to supervisors, in spite of the national wage tariff system.
Dispute regulation and restriction
There are no special courts to deal exclusively with disputes arising from matters related to collective agreements. Individual labour disputes over employee claims ensuing from collective agreements are covered by the Labour Code in the same way as other disputes concerning the employment relationship, and are dealt with by common courts.
The general right to strike is constitutionally guaranteed as part of citizens' basic economic, social and cultural rights and enshrined in the Charter of Fundamental Rights and Freedoms of the Czech Constitution.
Collective disputes arising from a failure to reach a collective agreement, or failure to fulfil its commitments, are covered by the Act on Collective Bargaining. The parties may create their own machinery for settlement of a dispute if they wish, prior to using the legal machinery. When the Act is invoked, the parties are subject to a process of mediation and/or arbitration before lawful strike action is permitted. A mediator can either be agreed on by the two parties, or appointed by the Ministry of Labour and Social Affairs, but the earliest this can take place is 60 days after the breakdown of negotiations. The mediator must offer a solution within 15 days, but if there is no settlement after a further 30 days, the parties can agree to an arbitrator appointed by the Ministry of Labour and Social Affairs. However, arbitration is only compulsory in the case of disputes in defined essential services2, where strikes are forbidden. Otherwise, a strike can be called if mediation has failed and arbitration is not requested, provided at least half the labour force "that the agreement shall concern" are in favour of the strike. This applies to disputes concerning both industry- and company-level collective agreements and also covers solidarity strikes. The Act on Collective Bargaining requires unions to give employers three days' written notice, giving the start date of the strike, the reasons for the action, a list of the names of the union members who are representing the strike, and a list of names of those employees participating (Art. 17). The law further states that employees cannot be prevented from striking, nor forced to strike (Art. 18), and employers are for-bidden from recruiting replacement workers during the strike (Art. 25).
Employers' right to lock out after failure to conclude a collective agreement follows the same three-day term of notice, with employers needing to give the reasons for the lock-out, detail the extent of the action and supply a list of the employees involved. As in the case of strikes, solidarity action is possible. Both strikes and lock-outs are illegal if called during mediation or arbitration, although a lock-out can be declared during a strike. However, lock-outs can be ordered only by an actual employer, and not an employers' organisation, and only in connection with a dispute over a collective agreement. It is not possible to declare a lock-out for other reasons.
In practice, there have been no reported cases of lock-outs, largely because the employer is obliged to pay the affected employees half their average earnings in compensation during the lock-out.
It should be noted that provisions of this Act apply only to strikes concerning the conclusion of collective agreements. No other legislation exists concerning the right to strike.
Individual labour law
The Labour Code governs individual as well as collective rights. Czech labour legislation distinguishes between employers in entrepreneurial activities (ie the profit sector) and the public service or "budgetary" sector. The former can give employees better working conditions than those provided by the Labour Code, through collective agreements or simply through custom and practice in individual firms. In the budgetary sphere, all working conditions and pay provisions are governed by regulations. The following selection outlines some basic rights as set out in the Labour Code:
Employee participation
The limited participation bodies, the pre-1989 Enterprise Committees of the ROH, were abolished during the tripartite debate leading to the formulation of the Act on Collective Bargaining. Employee participation was subsequently confined (via the Commercial Code) to the right to a third of the seats on supervisory boards3 in joint stock companies with over 50 employees. While the Code does not specify conditions of elections, in practice these are organised by the trade union (if there is one) in cooperation with the employer. The Government also attempted to introduce a German-style dual industrial relations system, with employee participation in works councils supplementing union negotiation rights. However, the unions prevented this, on the grounds that they believed that works councils would weaken an immature union movement. There is thus currently only one channel - the trade unions - for the development of worker participation and negotiation, although the European Works Councils Directive will add another layer to employee participation in the Czech Republic.
The labour market
Czech employment comprises almost a fifth of the four Visegrad countries' total. Out of the Czech Republic's total population of 10,304,302, around 4,885,000 were employed in 1996. The 1997 figures show a slight increase, at 5,006,000 - twice as many as in Slovakia, more than Hungary's 4,045,000, but a small labour force compared with Poland's 14,475,000 (1996). Employment levels declined after 1990, but far less dramatically than in other post-communist countries, and, as in Poland, began to recover by 1994. By 1995, employment levels were still 7.2% below 1990 levels, but this represented a smaller drop than Hungary's 27.4% decline, or Poland's 13.3% decrease.
Unemployment has been uniquely low in the Czech Republic - around 3.4% in 1996 - which has undoubtedly contributed to a long period of social peace. It should be noted, however, that there are regional differences, with the north and east suffering higher rates (5%-7%) and gender inequality, with women comprising 60% of the unemployed in 1996 (although around half the employed), and suffering a 4.1% unemployment rate compared with men's 2.4%.
There has been considerable debate surrounding the reasons for these comparatively low levels of unemployment: the slowness of enterprise restructuring, and the effectiveness of active labour market policies have been cited as key factors here. In addition, conditions for receiving benefits (and being counted as officially unemployed) are more stringent than in neighbouring countries. Benefit entitlement is only six months (compared with 12-18 months in Poland and three to 12 months in Hungary, depending on length of employment in preceding four years). Benefit levels are also low: 60% of the previous net wage for the first three months, 50% for the next three, subject to an upper limit of 150% of the minimum wage. Thus, there are incentives not to register as officially unemployed. However, in the current period of slow economic growth, even official unemployment is rising: in 1997, the average unemployment rate was 4.9%. By age, this is broken down into a rate of 9.4% amongst under-24s and 4.1% amongst over-24s4.
Industrial conflict
The incidence of industrial unrest has been low in the Czech Republic in recent years, but is now increasing. In 1994 and 1995, CvMKOS organised protest rallies against labour law deregulation and cuts in the provision of state pensions. Key areas of friction were the planned increase in the pension age and deregulation of employment law, especially plans to lower severance payments to two months' pay, to allow repeated use of short-term contracts and to permit night work for pregnant women. Strikes began with minimal action - such as a 15-minute general "warning strike" over pensions in December 1994, and a threatened railway workers' strike. However, in 1995, strikes in the public service sector increased over budget cuts, perceived poor restructuring policies and low wages. In June 1995, the railway workers threatened an all-out strike in support of claims for higher wages to gain parity with other groups, while calling for the resignation of senior management on the grounds of mismanagement. Doctors and teachers likewise demonstrated and threatened strike action if the Government did not increase its 10% pay offer for public sector workers. Following this period, greatest dissatisfaction both with pay and with the restructuring process was expressed in the health sector, spearheaded by doctors. Healthworkers' dissatisfaction became more generalised in 1996: in February, the Medical Trade Union Club (LOK), called a two-day strike in March and healthworkers began holding hospital meetings and organised petitions to be sent to the Government on the dissatisfactory state of their pay and the health service. The strike of 25 and 26 March 1996 gained strong support: 130 of the Czech Republic's 200 state-run hospitals were represented and 16,500 people attended a mass rally in Prague. However, little was resolved during 1996, and by December of that year, teachers were again considering industrial action, their summer wage rises already eroded by inflation and the promised wage indexation ignored for the coming year. Industrial relations in the Czech railways also became more confrontational, and, by February 1997, the rail unions reached deadlock with management over pay and transport restructuring, and paralysed the rail service when an initial 48-hour strike was extended for five days. A compromise settlement offered union consultation in a railway restructuring programme planned for May. Public sector unrest was exacerbated by the 1997 government budget plans to control annual inflation of 9.4%: wage increases in the economy were to be kept below 13.8%, with a maximum 12.5% for the state sector.
During 1997, industrial relations deteriorated further, in line with the general economic and political crisis: in June, the state budget crisis meant that state employees went unpaid for the first time, and strike action was only averted by an emergency meeting between CvMKOS and the Government. After this, the major issue facing trade unions was the lack of a clear restructuring strategy to instigate renewed growth and reverse the hardship brought on by the Government's austerity programme. In November 1997, CvMKOS called another protest rally, attended by some 60,000 workers.
The way forward
The Czech Republic is one of the 10 central and eastern European applicant countries to the European Union and began the accession process, along with the other applicants, earlier this year. The process is expected to take some time as, in the social field as in all others, applicants must adopt the acquis communautaire (the body of all existing EU legislation and provisions). Although the Czech Republic is a "front-runner" country, which is expected to accede to the Union sooner rather than later, it is widely recognised that this will be a lengthy and complicated process which is unlikely to be completed in the very early years of the next century. The incoming Austrian EU Presidency has announced that it intends to open accession negotiations with six countries, including the Czech Republic, this autumn.
In May 1998, the resolutions of the Second CvMKOS Congress reflect some of the main concerns facing trade unions and their key demands.
On social reform
On employment
On proposed new labour legislation
On discrimination and xenophobia
As in all the countries in transformation in central and eastern Europe, events in the Czech Republic are in extreme flux. In the general elections of June 1998, the Social Democratic Party (CvSSD) won 32.3% of the vote, with the former governing party, the Civic Democratic Party (ODS), winning 27.7%. The closeness of the vote created problems in the formation of a government, although the CvSSD finally emerged as governing party on 22 July, but with an "opposition agreement" whereby the ODS would tolerate the Government, but would leave the chamber when votes were taken, thus creating problems for keeping a quorum for any decisions. As we go to press, the results of a parliamentary vote on 17 August on the new Government, are not yet known. However, with the Social Democrats as the largest party, it is expected that a number of changes in the labour market and industrial relations are likely.
The Czech Republic in context
General
The Czech Republic has a population of around 10.3 million people, living in an area of 78,864 square metres. The main language is Czech and the main towns are the capital city of Prague, which has some 1,213,000 inhabitants, Brno (around 389,500), Ostrava (325,800) and Plzenv (171,900). The country's currency unit is the Koruna, which currently has an exchange rate of £=50.47 and $=30.92 according to the Financial Times of 10 August 1998.
Political system
The Czech Republic is a parliamentary republic. It has a parliament with 200 members and an upper house with 81 members. Members are elected by proportional representation. New elections have recently taken place, resulting in a narrow majority for the Social Democratic Party (CvSSD). A new Government is currently being formed. The head of state is a president - currently Vaclav Havel.
The economy
The main industries in the Czech Republic are mining, chemicals and manufacturing (of which transport equipment, electrical goods and fuel processing are major growth areas). In the years following the 1989 Velvet Revolution, there has been greater emphasis on the service sector and tourism in particular, especially in Prague. Foreign direct investment is now beginning to play a greater part in the Czech economy, with many multinationals, particularly in the high technology and information technology sectors, expressing an interest in establishing greenfield sites in the country. However, the economy has been experiencing difficulties over the past 12 months. GDP growth fell from 4.1% in 1996 to 1% in 1997 and inflation increased from 8.6% to 9% while pay growth slowed from 17.7% in 1996 to 13% in 1997. However, the longer-term prognosis is better, with Komencai Banka forecasting real GDP growth of between 2.5% and 3.5% this year, rising to between 5% and 6% by 2001. Inflation is expected to average between 5% and 6% this year, but is predicted to fall to between 4% and 5% by 2001.
Employment and the labour market
The total labour force in 1997 is estimated to be 5,006,000, out of a total population of around 10.3 million. The estimated rate of unemployment was 3.4% in 1996 and 4.9% in 1997. The OECD estimates that unemployment reached a seasonally-adjusted figure of 5.2% in the first quarter of 1998 (OECD Main Economic Indicators, June 1998).
1 Articles of the Act on Collective Bargaining are referred to here as "Art. 00". The parties to a collective agreement may be "trade union bodies and employers or their respective organisations" (Art. 2(2)) and/or "(a) a representative of the appropriate trade union body, duly authorised under the trade union constitution or under the rules of the trade union body in question; (b) the chairman or any other duly authorised representative of the employers' organisation; (c) a citizen employing workers in pursuit of entrepreneurial activities; (d) a representative of the appropriate employers' organisation vested with authority to conclude collective agreements under the rules of the organisation" (Art. 3).
2 The definition contained in Art. 20 of the Act on Collective Bargaining is as follows: (f) in case of military readiness of the state; (g) employees in health or social care if strike action endangers life; (h) employees operating equipment in nuclear power stations, facilities with fissionable material, equipment with crude oil or gas pipelines; (i) judges, prosecutors, members of armed forces and armed corps and employees in charge of traffic control and operation; (j) members of fire brigades, plant firefighting units and members of rescue units established under special regulations for specific work sites and employees in telecommunications provided the strike might endanger life, health or property; (k) employees working in areas hit by disasters in which emergency precautions have been declared.
3 This equates to the German system of a dual corporate management structure of a board of directors (where real power lies) and the supervisory board, which has an advisory capacity, but does not lead strategy.
4 Czech Statistical Office.
