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24. 9. 2007 18:32

The Government Approved the Establishment of the National Office for Employment and Social Administration and an Increase of Pensions since 1.1.2008

At its today's meeting, the Government has approved several important items, with regard to which we note the following:

Ad item no. 3 – Material intent of the Act on the Establishment of the National Office for Employment and Social Administration and of the District Directorates for Employment and Social Administration: The cabinet approved the intent and charged Petr Nečas, the Minister of Labour and Social Affairs, with the preparation of the relevant bill and its submission to the Government for review within six months. The National Office for Employment and Social Administration and the District Directorates for Employment and Social Administration, which are to be established as of 1 January 2009, shall assume the undiminished scope of activities which have been provided for until the present by the regional authorities and by various levels of municipal authorities within their delegated powers.

The Prime Minister Mirek Topolánek stated in this respect: “I believe that the key decision has been the decision on further work on the National Office for Employment and Social Administration. This discussion has been relatively tempestuous; however, after the inclusion of a whole number of comments, we have enabled the Ministry to carry on this work, also with regard to time.”
The Deputy Prime Minister and the Minister of Labour and Social Affairs Petr Nečas noted the following: “The basic purpose of this Act, which is a part of the conceptual steps taken within the scope of the public finance reform, is to unify separate allowances systems, which are very fragmented in our country, because a part of these systems, comprised of unemployment allowance and the state social support, is paid via labour offices, another part, which is comprised of allowance in material destitution, is provided via delegated municipal authorities, and yet another part of those allowances, comprised of a subsidy for the care for and social care allowances for the handicapped, is paid via municipalities with extended powers. The amount which passes annually through these systems is almost 90 billion CZK. We want to create a new, clearly cost-saving structure, which will make it possible to achieve relatively high savings within a relatively short period of two years after its establishment.“

Ad item no. 5 – The Government proposal to the Supreme Administrative Court to suspend the activities and to dissolve certain political parties and political movements: The Government has reviewed and approved a Proposal submitted upon the decision of the Chamber of Deputies no. 295, adopted at the 14th session held on 27 April 2007. This proposal relates to parties and political movements which fail to fulfil their legal duty to submit their annual financial reports, including data prescribed by the law, to the Chamber of Deputies by 1 April of every year.
The Prime Minister Mirek Topolánek substantiated the proposal as follows: “This matter has also been reviewed by the Chamber of Deputies, which actually approves reports on the activities of political parties, and I believe that no such case has been fabricated by the Government. Repeated reminders were sent and deadlines were not kept in these cases, and we have no other choice under the law but to dissolve such entities or to suspend their activities.”

Ad item no. 11 – Draft government order to increase pensions in 2008: The Government has approved an increase of pensions that are currently being paid. Under such increase, which will come into force on 1 January 2008, the basic pension assessment will increase by 130 CZK to 1700 CZK per month and the percentage pension assessment will increase by 3%, i.e. a total increase of 3.95%. The costs of such pension increase will amount in 2008 to 11.66 billion CZK; this amount is provided for in the proposed state budget for 2008.

The Deputy Prime Minister and the Minister of Labour and Social Affairs Petr Nečas noted the following in this respect: “The average amount is 346 CZK. Pensions represent the sole social allowance where we have kept the automatic valorization scheme, which means that pensions are valorized every year at least by the total inflation increase plus one third of the increase of wages. Based on the construction of this valorisation, the increase of the basic pension assessment by 130 CZK will cover to every pensioner the impact of non-market tax changes which will take place in the next year, i.e. the increase of the reduced VAT rate from five to nine percent and the introduction of excise tax on utilities. According to our calculation of the consumer basket of pensioners, such expenses of a single-member pensioner household will increase, due to these two tax changes, by 115 CZK a month. We propose the compensation of 130 CZK plus the percentage compensation, i.e. a total pension increase of 346 CZK. Thus, the average old age pension will amount since 1 January of the next year to 9111 CZK per month. If we take into account that Mirek Topolánek's governments came into office last September and the average pension amounted last year to 8188 CZK, we can find out that the average pensions have increased by about one thousand crowns during the year and a quarter of the existence of Mirek Topolánek's governments.”

Ad item no. 2 – The suspension of review of the Amendment to Act No. 243/2000 Coll. on Budget Allocation of Taxes was explained by the Prime Minister of the Czech Republic Mirek Topolánek as follows: “The amendment has not yet won full coalition support. The bill is not balanced and we will rather talk about modifying this change, which was demanded by us before the election and which represents a leap, or the determination of a contribution per citizen by a leap in accordance with the total number of the population, into another transient curve, and about coupling it with more significant changes of the budget allocation of taxes, which will arrive, of course, with the change of taxes and with the change of tax revenues of municipalities in 2009. This means that this discussion is fully rational at this moment, because such change is rather fundamental. In my opinion, it has not been sufficiently discussed and if we manage to complete our discussions by the next week, the change will take place; if not, it will be carried out a year later.”

Press Department of the Czech Republic Government Office

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