The Czech economy will grow, according to a new report from the Organization for Economic Cooperation and Development (OECD) which includes recommendations for the Czech Republic. While in 2013 the Czech gross domestic product dropped by 0.9%, this year it will grow by 1.1% and growth in 2015 could even reach 2.3%. However, this will require further steps in three specific areas that are key for strengthening the domestic economy. What are these?
1. Support for economic recovery and potential growth
- Maintaining a accommodative monetary policy until the risks of deflation are finally resolved.
- Maintaining a neutral fiscal policy until the onset of the economic recovery.
- Ensuring fiscal sustainability by raising the retirement age and diversification of sources of income for pensioners.
- Finding consensus on important reform initiatives and introduction of an independent fiscal council with broad powers.
2. Strengthening competition
- Improving the integrity management of state-owned enterprises. Privatization of the remaining state-owned enterprises and related activities.
- Uncovering cartels and especially so-called "bid-rigging" - prohibited agreements on cooperation between applicants for public contracts.
- Ensuring the independence of regulators, improving coordination between the competition authority and regulatory authorities and a common approach on the correct definition of a dominant market position.
3. Improving skills and the transition from school to work
- Supporting employers in training unskilled workers through tax credits or targeted reductions in social security contributions. Introduction of a minimum wage for youth in conjunction with training.
- Increasing the involvement of private employers in vocational education.
- Ensuring the quality of tertiary education e.g., by the introduction of tuition fees.
- Strengthening women's participation in the labor market via sufficient and available childcare facilities. based on reducing the duration of parental leave and replacing a part of the parental allowance with childcare vouchers.
A more detailed summary of the OECD report entitled Economic Survey of Czech Republic in 2014 and the individual recommendations can be found at http://www.oecd.org/eco/surveys/economic-survey-czech-republic.htm
-Kk-