| 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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