Environmental issues for sustainable development

Environmental issues for sustainable development

Jun 6, 2017 / No Comments

 Environmental issues for sustainable development

There is growing concern that long-run sustainable development may be compromised unless measures are taken to achieve balance between economic, environmental and social outcomes. This chapter looks at two environmental issues relevant for sustainable development: climate change and air pollution. In each case, indicators are presented to measure progress and the evolution of potential problems, and an assessment is made of government policies in that area. An assessment of whether institutional arrangements are in place to integrate policy-making across the different elements of sustainable development is made in Box 7.1. Discussion on the important sustainable-development topic of pensions can be found in Chapter 2. Climate change Main issues Even though its greenhouse gas (GHG) emissions in ten years time look set to be well below the Kyoto target, the Czech Republic might gain from further abatement, provided that projects can be found yielding emission reductions that cost less than the price of allowances on international markets. The country’s excess allowances could then be sold abroad for a profit, or, more speculatively, could be saved to count against any future commitments for further emission reductions, when prices might be higher. The economy’s low energy efficiency likely implies low-cost emission reduction opportunities. The main issues are to concentrate climate policy on abating emissions where costs are lower than international carbon price and to achieve those reductions in a cost-effective fashion. Performance Notwithstanding a comparatively strong decline in the course of the 1990s, the GHG emission intensity of the Czech economy is one of the highest in the OECD area (Table 7.1). High emissions per unit of output are pervasive throughout the economy. In electricity generation, where emissions per kWh even

The integration of policies across sustainable development areas

The integration of policies across sustainable development areas

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The integration of policies across sustainable development areas 

Until the national sustainable development strategy (due to be approved by the government at the end of this year) the principal framework for the integration of environmental policies with other policies and promotion of sustainable development was contained in the State Environmental Policy. First issued in 1995, this government resolution has been regularly updated (in 1999, 2001 and 2004). One of the main goals of the 2004 revision is to make environmental management better articulated with the country’s economic policies and to strengthen co-ordination between the Ministry of the Environment and other government departments. A governmental council on sustainable development was established in August 2003. It has led the preparation of the national sustainable development strategy and reinforced policy coherence and integration. The council is currently chaired by the Deputy Prime Minister for Economy. Other government departments and the Parliament are also represented in the council and the council is served by working groups which provide additional platforms for co-ordination. One of the main challenges faced by the council has been to improve co-ordination amongst the large number of institutions dealing with issues in sustainable development, especially as the new three-tier administrative structure in the public sector might otherwise result in blurring the allocation of competencies across government levels. In practice, integration remains limited as regulatory impact analysis of sustainable development policies is not systematically undertaken. The authorities have not used cost-benefit analysis as a regular policy integration tool in the past. Such analysis is required for neither policy programmes nor projects, and has only been applied to projects funded by the European Union. On the other hand, environmental impact assessments (EIA) have been extensively applied to economic development projects since they became mandatory in 1992. Projects have sometimes had to be amended or abandoned as a result of EIAs because the environmental damage was judged to be excessive. The accession to the European Union requires the Czech Republic to subject plans and programmes to strategic environmental assessments (SEA).

The treatment of Czech workers in EU15 during the transition period

The treatment of Czech workers in EU15 during the transition period

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The treatment of Czech workers in EU15 during the transition period

In 11 of the EU 15 countries, and for the first two years of EU-membership, the treatment of Czech workers will be comparable to that before accession. Citizens from the new member countries will still need a permit to work – and some countries have introduced quotas for new member states workers, and some very specific exemptions (Table 6.4). These restrictions could be extended for up to 5 additional years until May 2011. At the same time a “preference rule” is stated, which should give new member workers priority over people from third countries. The accession treaty also provides for possible restrictions on the free delivery of cross-border services. Austria and Germany have passed legislation restricting the movement of workers from new member countries in a number of sectors, notably construction and industrial cleaning (Table 6.4). The situation of workers from the new member states already working in one of the EU15 countries before May 2004 with a work permit of at least 12 months has improved however, since they are automatically granted the possibility to work in the host country without renewing their permit. The same rule applies to those who obtain a work permit for one year or more. The situation of the self-employed is also unchanged, as they have been free to establish in the EU15 since the Europe agreement came into force in 1995. Czech workers will nevertheless have access to some EU countries. While a work permit is still required in Denmark for citizens of new member countries, eligibility is very easy to fulfil compared with third country nationals (although Denmark has kept the right to revise these conditions after two years). Ireland, Sweden and the United Kingdom have fully opened their labour market. At the same time, fearing an increase in claims to social assistance, Ireland and the United Kingdom have restricted access to their welfare systems by conditioning it to a residence test. The restriction applies to social assistance schemes, such as unemployment assistance, disability allowance, housing allowance, child benefits, etc. While the test applies to citizens of all nationalities, the European Commission is still examining the legislation as it is concerned that the residence test de facto constitutes an indirect discrimination among EU citizens, infringing the clause of equal treatment for access to social assistance and insurance.

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overseas. What about the long run? In general studies find that migration flows will increase in a free movement environment, but not massively. A study by AlvarezPlata et al. (2003) for the European Commission estimates the long-run migration potential stock of the recent 10 EU members to be between 3.2 and 4.5 million persons in 2030, corresponding to 3.2 – 4.5 per cent of their population. Various studies with country-specific results have also been conducted (Table 6.5). These studies probably overestimate the migration potential as they measure the propensity of workers to migrate, not the capacity of host-country labour markets to absorb additional workers, and the gap between propensity, serious intention and action is difficult to capture. This aside, the results of Table 6.5, interestingly suggest that Czechs are among the least inclined to migrate.

Immigration policy: addressing the needs of an ageing labour force

Immigration policy: addressing the needs of an ageing labour force

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Immigration policy: addressing the needs of an ageing labour force

Since 1989 the Czech Republic has been increasingly exposed to international migration. With one of the highest incomes per capita in Central and Eastern Europe, the Czech Republic has received more immigration flows than the other countries in the region. Indeed, immigration has typically exceeded emigration, making the country one of net immigration. Nevertheless foreigners are still only a relatively small share of the population and integration issues are just beginning to surface, and fears of swelling migration flows in both directions after EU accession appear unfounded. Also, migration arising from the joint labour market agreement with Slovakia is helping to overcome imbalances in the labour market. Policy is only beginning to address immigration issues actively and various inconsistencies among different policy areas remain. Looking further ahead, the ageing of the Czech population is relatively further advanced and faster than in most other OECD countries. Preparing for these demographic changes and mitigating their impact on economic growth and living standards is therefore a key policy priority, which is also relevant for shaping migration policy towards the needs of the Czech labour market. This Chapter first looks at historical developments and recent trends in migration. This is followed by sections examining immigration policy, the economic impact of immigration and the likely future trends in emigration. A final section presents some concluding comments. A policy assessment is contained in Box 6.1. Migration history: towards free movement of labour1 Historically, Czechoslovakia was a country of emigration rather than immigration. In the first half of the 20th century, emigrants, motivated mainly by economic reasons, moved to western Europe and to the “New World” in the United States and Canada. The Second World War generated sizeable migration flows and, after the end of the conflict, massive net emigration took place due mainly to the expulsion of 2.5 million Germans from the border regions of the Czech Republic, only very partly compensated by return flows from abroad

Active labour market policies

Active labour market policies

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Active labour market policies

Active labour market policies are specified in the new Employment Law. The schemes include: Retraining in accredited institutions provided to unemployed with inadequate labour market skills. The cost of retraining is covered by the labour office. In the new law labour offices may also support the training of employees on the basis that this is necessary for the individual to keep their job. Investment incentives to employers subsidising the creation of new jobs or retraining of new employees in districts where unemployment rate is at, or above the national average. Subsidy amounts are defined by government directives (Chapter 4). Public works comprise temporary work, mostly in cleaning of public areas or public buildings or work for state institutions, for which a subsidy up to total labour cost can be granted. Publicly beneficial work positions – subsidised jobs created by an employer after the agreement with a labour office for the unemployed that are classified by the labour office as difficult to place. The total amount of subsidy granted to the employer is limited to 4 to 8 times the monthly average wage per person per year, depending on the unemployment rate in the district and number of jobs created by the employer. This subsidy may also be granted to newly self-employed. Subsidy for employment of clients in “special care” of the labour office (namely, persons with disabilities, young up to the age of 25, other school-leavers, pregnant women, persons taking care of a child under 15 years of age, persons above 50 years of age, persons unemployed for more than six months and persons with difficult social background). This new subsidy can be provided in the amount up to a half of the minimum wage during three months. Jobs created for in-job training of school leavers and youngsters can be fully or partially subsidised for up to one year. Support to workers with disabilities. This includes job counselling and training, subsidies for job creation and subsidies to employers where workers with disabilities represent more than 50 per cent of employees. Employers with more than 25 employees are obliged to employ workers with disabilities. Workers with disabilities represent four per cent of employees. Such employers can compensate this duty by buying products or services from other employers who employ mostly workers with disabilities, or by paying to the state budget a 1.5 multiple of average monthly wage per year for each disabled person they do not employ. The subsidy for job creation can amount to 8 to 14 times of the monthly average wage, further recurring support can be provided for wage and operation cost. Funds for employing workers with disabilities are claimable and come under mandatory expenditures of the state budget. Bridging subsidy for newly self-employed who have been registered as unemployed. This new subsidy can amount to a half of the individual minimum subsistence amount paid during three months. Transport subsidy. Subsidy for employers who provide daily transport of their employees in the areas not served by public transport. This subsidy can be up to 50 per cent of the cost. Subsidy for the maintenance of jobs during a change of business activity, when the employer is not able to provide work for employees in the legally stated extent. A subsidy can cover part of the wages (with a cap at half of the minimum wage) for a maximum period of six months.

The new Employment Act

The new Employment Act

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The new Employment Act

 A new employment law has been in force since October 2004. It regulates the implementation of state employment policies, including rules for job placement and entitlement for unemployment benefits, employment of workers with disabilities and employment of foreigners. The new law also defines tools for active policies (Box 5.4) and assigns duties for labour inspection of both Czech and foreign workers. The main changes introduced by this law are: – Stricter registration and reporting requirements with labour offices and conditions for provision of unemployment benefits. – The six-month standard duration of unemployment benefits has been prolonged to nine months for those older than 50 years and to twelve months for those above 55 years of age, conditional on 25 years of participation in pension insurance (30 years for the twelve-month extension). – The amount of unemployment benefit is to remain the same for the first three months of unemployment (at 50 per cent of previous net earnings) but has been increased from 40 to 45 per cent thereafter, with the maximum amount remaining 2.5 times the personal minimum subsistence amount (Table 5.2). – “Partial unemployment” has been introduced, in which the unemployed can earn up to a half of minimum wage (working maximum of a half of legislated fixed working time) and still get unemployment benefit. – Principles and conditions of active labour market policies have been re-defined. – With EU accession, all EU citizens and their families are granted the same legal status on the Czech labour market as Czech citizens. Employment of other foreigners is subject to a labour market test, and its control is assigned to labour offices (Chapter 6).

Progress on implementing the 2003 fiscal reform proposals

Progress on implementing the 2003 fiscal reform proposals

Jun 5, 2017 / No Comments

Progress on implementing the 2003 fiscal reform proposals

The “first phase” of fiscal reform is contained in Government Resolution 624/2003. Some parts of the resolution have since led to the implementation of measures, other parts of the resolution are still under discussion in Parliament and some have yet to be presented to Parliament. The content of “second phase” reforms is more uncertain. The authorities have stated intention to reform the pension and health care systems, however concrete proposals are yet to be presented to Parliament. Implemented tax measures Corporate taxation – The corporate tax rate was reduced to 28 per cent in 2004 and is scheduled to be cut to 26 per cent in 2005 and 24 per cent in 2006. Some revenue-increasing measures were taken that would partially offset the impact of the rate decrease including a reduction in the period allowed to carry losses forwards from 7 to 5 years and the abolition of a tax credit on withheld taxes on dividends. Small-business taxation – All entrepreneurs with annual turnover more than CZK 6 million now have to make “double entry” accounts. – A minimum tax has been introduced for entrepreneurs (based on half of the average wage) – The minimum turnover for VAT registration was lowered in two stages from CZK 3 million to CZK 1 million so as to be in line with Accession Treaty conditions of a limit of EUR 35 000. Personal taxation – Tax on real estate property transfer has been reduced from 5 per cent to 3 per cent. – The inheritance tax for non-direct relatives has been increased. – A limit on the depreciation allowed for tax purposes on used cars was introduced. VAT reform On 1st January 2004, items moved from the reduced rate of 5 per cent to the standard rate were (22 per cent) included: – Telecommunications (except cable TV).