CZECH REPUBLIC: OECD says Czechs need pension, health reforms due to ageing

PRAGUE (Czech Happenings), April 24, 2008: The Czech Republic should reform its pension and health care systems in connection with population ageing to prevent threatening debts, the Organisation for Economic Cooperation and Development (OECD) said in its report. The OECD praised the reforms of the Czech right-wing coalition government of Mirek Topolanek (Civic Democrats, ODS). It recommended that retirement age be raised and patients pay more for health care services. The Czech Republic will face two stages of fast ageing by the mid of the 21st century, OECD says, citing a U.N. prognosis, according to which two waves of baby- boomers will be retiring from the early 2010s to the early 2020s and from mid 2030s to 2050. OECD Secretary General Angel Gurria indicated that the pension system might collapse if retirement age does not rise to 66 or 67. The pension age has already been raised in the Czech Republic to 63. Czech Labour Minister Petr Necas (ODS) proposed that it be further raised to 65. The government- proposed bill is now being discussed in the lower house. The OECD says the Czech Republic should make a final decision on a more radical pension reform if it wants people to receive pensions at higher levels than those securing only minimum sustenance. The OECD report warns that the government's plan to move a part of people's pension savings to funds would critically lower the sums going to the state pension system. The voluntary pension schemes should be made more attractive, the report says. It appreciates the health care measures taken under Health Minister Tomas Julinek (ODS) who introduced fees in Czech health care as of January. The Czech Constitutional Court is now dealing with the complaint against the fees filed by the opposition Social Democrats (CSSD). Within the health care reform, the government will have to decide on the scope of health care services covered from public budgets, the report says. It considers the transformation of health insurance companies into business companies a key issue. However, the report says OECD countries have had only limited experience with such a health care reform and close monitoring and measures preventing negative impacts are therefore necessary. The Czech labour market needs to be reformed, too, the OECD says, mentioning a more liberal Labour Code, lower tax burden, more accessible part-time jobs among the desirable changes. Work and family should be more harmonised, the report says. Its authors believe that maternity leave should not last longer than two years or even less. As of January, Czech parents may choose whether to go on maternity leave for two, three or four years. The OECD supports the introduction of tuition fees at Czech universities. Education Minister Ondrej Liska (Greens) says though the current government will not introduce tuition fees, it is necessary to discuss the issue. The OECD report points out that the OECD average is 26 percent of university graduates among the population, while in the Czech Republic it is only 13 percent. The Czech Republic should motivate people to work because limited manpower may threaten economic development. The country should give jobs also to senior citizens and reform its migration policy to attract foreign job seekers. In this context, the report supports the government's plan to introduce a system of green cards for foreigners. The plan is now discuss by the lower house. The Czech leftist opposition and labour unions criticise most measures adopted by Topolanek's government. Author: ČTK Copyright (c) 1995-2008 Neris s.r.o.