August 17, 2016

Highest Budget Surplus In The Czech Modern History

Labor Ministry proposed a rise of minimum wage

Czech Minister of Labor Michaela Marksová proposed a rise of minimum wage level. The current monthly standard is CZK 9,9000 and is suggested to be lifted to CZK 11,000. The trade unions pushed for CZK 500 more, while the employers ask it not to be any higher than CZK 10,600.

Marksová, frequently presented as a “progressivist”, thinks that Czech Republic should not be in the EU’s “tail end” regarding the minimum wage level. Currently, only 22 EU countries set a minimum wage, and the Czech Republic is 18th on the list. On average the all these 22 countries increased minimum wage salary by EUR 70 over past two years. Currently only 7 EU countries have the minimum wage level above EUR 1,000.

Vladimír Dlouhý, chairman of the Czech Chamber of Commerce is concerned about the situation: “Regularly increasing the minimum wage creates pressure to increase pay in general.” Practically, government’s goal is to raise a minimum level of wages up to 40% of country’s average salary.

Rising minimum wage – good or bad? What is the minimum wage in the Czech Republic and how it compares to other EU countries? Read our article Changes In Minimum Wage – Czech Republic 2016.

Highest budget surplus in country’s modern history

The Finance Ministry of the Czech Republic declared the state budget surplus of over CZK 75.5 billion by the end of July 2016. It is 35 billion higher than the previous month and 50 billion higher than it was registered in the same period of the last year. Besides that, it is the best result since the time of founding the Czech Republic in 1993.

Highest Budget Surplus in Modern History

The Finance Ministry of the Czech Republic declared the state budget surplus of over 75.5 billion crowns by the end of July 2016. It is the best result since 1993, the establishment of the Czech Republic.

Posted by Jobspin.cz on Tuesday, August 16, 2016

The chief economist of Poštovní spořitelna, Jan Bureš, said that after the first quarter of 2016 the overall budget deficit for this year could be lower by the end of 2016 than previously envisaged: “If the state wanted, it could in my view achieve a better balance than the CZK 70 billion that it reckoned with at the start of the year.” Recent news state that most probably things are getting even better and the growth rate can maintain at the same positive level till the end of 2016.

Besides tax revenues another noticeable reason for the record budget surplus has been a growth in cash transfers from the European Union. They shot up by 19.3% in the first quarter to reach CZK 78.8 billion. Economist Marek Dřímal of Komerční banka considers this to be first of all because of the EU funds stemming from the 2007 to 2013 program period. Giving an interview to Czech Television in spring 2016, he warned that this money will virtually dry up in the coming months, leaving tax revenues as the only means of filling the state’s pockets.

Economist David Marek, from Deloitte & Touche, sharing his view on what’s behind the record surplus, mentioned: “Tax collection is much higher than in previous years, helping to keep the budget in surplus and even increasing the surplus, compared to previous years.” Besides that, he thinks that the surplus should be explained mostly by an overall growth of the Czech economy: “An increase in the effectiveness of tax collecting is visible, but I would attribute the improved budgetary data especially to economic growth.”