Wages and working legislation in the Czech Republic
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  Czech Wages legisl.


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Authors: Iva Subrtová, PricewaterhouseCoopers
Publication: Doing Business in the Czech Republic
(prepared by PP Agency for the Czech Ministry of Industry and Trade)

Czech wages, working hours, holidays and wage increase


The Czech Workforce:
Overall, the workforce in the Czech Republic offers an above-average level of education and technical skills compared to its low cost.

Unemployment varies depending on the region, but it is generally possible to find suitable candidates for open positions.

Labour unions, where they operate, focus on collective bargaining, while industrial action is extremely rare.

Labour relations are governed by a
recently amended Labour Code.

Companies that are operating in the Czech Republic will be obliged to follow legal rules that will come into force on the day of admission of the Czech Republic to the EU.

Enforcement of EU Standards in the Area of Employment
In view of the planned entry into the EU, the Czech Republic has adopted certain standards and principles that cover all employees. These measures can also affect companies' costs.

Most of the European directives were included in the amendment of the Labour Code that has been in force since 1 January 2001.

Other changes that will affect personnel costs are already included in the Labour Code, and came into force on the day of entry of the Czech Republic to the EU 1st May 2004.

These changes relate to sending employees to work in another EU member state, as well as the right for information and employee negotiation.

The employer will be obliged to adopt the legal regulations of the state where the employee will be sent regarding working hours and recreation time, length of vacation, minimum wage, minimum salary tariffs, overtime work bonuses, safety requirements and health precautions at work, working conditions for women and teenagers, equal treatment of men and women and ban on discrimination, if Czech law does not have regulations more favourable for the employee.

The rights for information and employee negotiation were included and broadened in the Labour Code in compliance with the European directive as of 1 January 2001.

The right of employees whose employer operates in the European Union for supranational information and negotiation is enforced by a stipulated process or by the European Employee's Council, which is set by the Negotiation Committee according to the Labour Code.

Comparison of Legal Regulations and Costs in EU Member States and in the Czech Republic...
Comparison of legal minimum wages in the EU and Czech Republic

In the Czech Republic, as in most EU member states, legal monthly or hourly minimum wages are set regularly.

In the EU countries where a minimum wage is set, its value ranges between 406 and 1,290 EUR.

In the Czech Republic, the current minimum wage is less than 250 EUR.

Maximum working hours set by law
On the basis of the European directive, a maximum working hours limit was set in the EU countries at 48 hours per week and the Czech Republic follows this requirement.

This maximum number of hours can be exceeded in the short term; however, it should be followed on average over four months.

Minimum paid vacation by law
Legal paid vacation in the Czech Republic is four weeks - the same as set by the European directive.

Some EU member countries offer longer paid vacation, which is defined in working days or weeks.

In the Czech Republic, longer vacation is an employee benefit.

Comparison of labour costs in industry and services
In EU countries, labour costs range from 7.5 to 29.2 EUR per hour, compared to 4.6 EUR in the Czech Republic.

On average, 75 per cent of the total hourly labour costs are direct costs and 25 per cent are indirect.

Gross wage and bonuses of an employee represent on average 65.7 per cent of total costs.

The largest part of indirect costs is the social security contribution (23 per cent of total costs).

Comparison of gross wages in industry
Despite the substantial wage differences between EU member states, the average gross wage in the Czech Republic represents between one-half and one-third of the EU average, depending on job position.

Wages in the Czech Republic are still undervalued in absolute level in comparison with EU countries, and that is why in future we can expect higher increases in gross wages than in the EU.

EU countries raised their nominal wages on average by 3.9 per cent in 2001. Among them, the highest growth of nominal wages was in Ireland (8.1 per cent).

In the Czech Republic, the growth was 8.5 per cent.

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