Structural Flaws of the State Operation and Their Social Impacts PDF Free Download
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Vol. 61, No. 3 (CZ)
April 2023
1052 Budapest Petőfi Sándor utca 11.
Kiadó: Kína-KKE Intézet Nonprofit Kft.
Szerkesztésért felelős személy: Ju Weiwei
Kiadásért felelős személy: Feng Zhongping
2017/01
+36 1 5858 690
office@china-cee.eu
china-cee.eu
ISSN 2939-5933
Czech Republic social briefing:
Structural Flaws of the State Operation and Their Social Impacts
Ladislav Zemánek
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Structural Flaws of the State Operation and Their Social Impacts
Summary
The Czech Republicʼs socioeconomic development is being hindered by several structural
as well as subjective factors inclusive of expanding indebtedness, insufficient digitalisation,
inefficient subsidy policies, the discrepancy between normative strategies and actual actions of
the state actors as well as underdeveloped key infrastructure. The briefing analyses the recent
report presented by the Supreme Audit Office in this field and puts its findings into a broader
context. It draws connections between those flaws on one hand and the deteriorating position
of the middle class, rising discontent and radicalisation on the other. The latter has already led
to a wide array of civic initiatives.
Introduction
The socioeconomic situation in the Czech Republic is complicated. The political leaders
and state authorities are confronted with a wide array of challenges and serious problems both
internally and externally. The government has not been able to handle them yet which has led
to widespread discontent even among the middle class. The incumbent cabinet becomes
increasingly less popular and voter preferences of some of the ruling parties have likely dropped
below 5 per cent. At the same time, new popular initiatives and political subjects appear which
is accompanied by a number of mass anti-government rallies in the capital of Prague and
beyond.
Addressing the negative factors
Both structural and subjective problems of the operation of the Czech state can be
identified based on the April report elaborated by the Supreme Audit Office.
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(1) The rising state indebtedness: The post-pandemic economic recovery has been
undermined by the outbreak of the conflict in Ukraine with the related rise in prices of
commodities, energies and fuels. The year-on-year GDP growth was below the EU average last
1
Výroční zpráva o činnosti NKÚ za rok 2022 (2023, April). Nejvyšší kontrolní úřad.
https://www.nku.cz/assets/publikace-a-dokumenty/vyrocni-zprava/vyrocni-zprava-nku-2022.pdf
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year while inflation remains to be above the EU average. The increase in gross wages has not
offset the galloping inflation as a result of which the living standards of the overwhelming
majority of Czech society have been deteriorating considerably. The drop has been among the
steepest within the OECD. Despite rising tax revenues, the balance of the state budget has been
worsening at a rapid pace. The ratio of the debt to GDP reached almost 43 per cent by the end
of 2022. It remains among the lowest in the EU, however, the pace of rise of the state debt was
the third-highest in the same period. Whereas the Czech Republic was the fourth-least indebted
EU country not long ago, it occupies the eighth position at the moment. The state budget is
burdened by expanding expenditures which do not correspond with revenues. Several years
ago, state revenues covered the expenditures while the former managed to cover only 89 per
cent of the latter in 2021. And the situation has been quickly deteriorating since then. The
Supreme Audit Office, therefore, has repeatedly warned against state budget deficits and
deficiencies in economic management which pose a serious threat to the stability of state
finances.
(2) Insufficient digitalisation: Notwithstanding the demand for electronic communication
with the state among citizens, electronisation and digitalisation have been carried out slowly
and without substantial results. The state administration is reluctant to revise and innovate the
processes which hinders overall qualitative improvement. The authorities still fail to fulfil one
of the approved priorities of the eGovernment, that is, the principle “once only” when the state
is able to use the data which have been once gotten for any administrative agenda, which makes
bureaucracy much more efficient. The slow pace of electronisation can be considered one of
the causes of problems in countering the pandemic. Not by coincidence, the Czech Republic
has ranked below the EU average in digitalisation according to the Digital Economy and Society
Index (DESI) which tracks the progress of digital performance within the EU. The countryʼs
position has been, moreover, gradually deteriorating over years.
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(3) Inefficient subsidy policies: The national authorities do not control the actual purpose
of the provided subsidies and, therefore, state financial resources are wasted without any
benefits for both the state and citizens as well as the competitiveness of the country. The state
bodies often do not know the impacts of the subsidies, limiting themselves to the supervision
of formal features. As a consequence, the subsidy policies fail to boost the innovation and
development of the Czech Republic.
2
The Digital Economy and Society Index (DESI) (2023). European Commission. https://digital-
strategy.ec.europa.eu/en/policies/desi
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(4) Breach of state normative documents: Some state departments have acted in breach
of priorities and policies set by national strategies, which frequently applies to the areas that are
vital for the sustainable development of the Czech Republic, for instance, agriculture or
environment. The Supreme Audit Office points to the bad practice when financial subsidies are
provided to large enterprises despite the priority for SMEs. As a result, both national and EU
funds are often withdrawn by the most profitable subjects, which only strengthens their
dominant position in the market. Similarly, the state bodies fail to fulfil goals in the fields which
have a direct impact on the citizens. The Ministry of Education has not implemented the
Strategy of Digital Education in due time which thwarted an efficient shift to remote learning
during the pandemic. The country is still lacking a comprehensive system of soft targets
protection and the state authorities have not succeeded in decreasing the prices of mobile data.
These remain to be among the highest in the EU.
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(5) Underdeveloped key infrastructure: The slow administrative proceedings together
with insufficiency delay the construction of key infrastructure, making it more expensive at the
same time. Modernisation and development of the railway network are lagging behind schedule
which can lead to the violation of international commitments within the Trans-European
Transport Networks (TEN-T). The Ministry of Transport has recently announced that the basic
motorway network should be completed by 2033.
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Similar statements were, nevertheless, made
in the past repeatedly without any concrete results. Not only will there be no high-speed
railways in the next years but the ring road around Prague as well as a modern connection
between the Prague airport and the city centre are still lacking despite multiple initiatives
existing for decades. In addition, the development is undermined by rigid building regulations
which are inflexible and excessively demanding in relation to the current needs.
Social impacts and response
The recent report of the Supreme Audit Office identifies serious shortcomings in the
operation of the Czech state including slow innovation and modernisation, weak control
mechanisms and waste of public funds. These contribute to the deterioration of the structural
problems of the state and economy counting indebtedness, restriction of investment and the
3
Volání a data v Česku zůstávají mezi nejdražšími v Evropě (2022, December 12). Peníze.cz.
https://www.penize.cz/nakupy/438659-volani-a-data-v-cesku-zustavaji-mezi-nejdrazsimi-v-evrope
4
Kupka slibuje výhled dopravních staveb na deset let, do roku 2033 chce mít hotovou dálniční síť (2023, April 6).
ČT24. https://ct24.ceskatelevize.cz/domaci/3577129-zive-tiskova-konference-ke-stavebni-sezone-na-dalnicich-a-
silnicich-i-tridy
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consequent undermining of development. It has already become evident in the quality of
education and science as well as in social polarisation and radicalisation.
An increasing number of surveys and analyses indicate that the ongoing crises are
affecting the middle class. Whereas the most wealthy social stratum is usually protected from
negative financial impacts amid crises due to their objective economic possibilities and the
poorest stratum is protected by the welfare system, the middle class can be paradoxically
endangered the most under the current circumstances. The long-term financial reserves have
been decreasing as a result of inflation. Since 2020, the overall quality of life has deteriorated
which is accompanied by subjective discontent among the rising segments of the population.
Whereas up to 69 per cent of the Czech citizens declared they were subjectively satisfied with
their life before the pandemic, the figure dropped to 54 per cent by the end of 2022.
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The sense
of insecurity has resulted in massive savings wherever possible. The Czechs are saving money
the most among the EU nations. It has, in turn, contributed to the economic slowdown and fall
into recession last year.
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Despite the fact that the incumbent cabinet promised a moderate fiscal policy, budget
responsibility and structural reforms aimed at the long-term sustainability of the systems in
question, the disillusionment among society is increasingly discernible, for the government has
often gone against its priorities, communication with the public is poor and ministers prioritise
external issues such as military assistance to Ukraine and containment of China and Russia to
the detriment of domestic problems. It has already started to affect voter preferences.
Authoritative surveys conducted in April indicate that up to three out of five government parties
could fail to gain seats in the Chamber of Deputies if running separately. The main opposition
subject (ANO) keeps its leading position with support between 29 and 35 per cent whereas the
second and at the same time the strongest government party (ODS) is lagging far behind with
support between 15 and 20 per cent.
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Nevertheless, the tactics of the united front could partially
offset the weaker position of the liberal democratic camp again as it occurred in 2021.
5
Češi jsou stále méně spokojeni se svým životem. Stěžuje si už i střední třída (2023, January 22). Seznam Zprávy.
https://www.seznamzpravy.cz/clanek/domaci-cesi-jsou-stale-mene-spokojeni-se-svym-zivotem-stezuje-si-uz-i-
stredni-trida-224041
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Holub, P. (2023, April 11). Radikálně šetřící Češi posílají zemi do problémů. Seznam Zprávy.
https://www.seznamzpravy.cz/clanek/ekonomika-zvlastni-krize-cesi-spori-nejvic-v-historii-zemi-to-ale-muze-
poskodit-229123
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Kantar: Sněmovní volby by vyhrálo ANO před koalicí Spolu. Babišovo hnutí atakuje hranici 30 procent (2023,
April 16). iROZHLAS. https://www.irozhlas.cz/zpravy-domov/pruzkum-volby-kantar-ct-snemovni-volby-ano-
spolu-ods_2304161337_ako. Median: V březnu by volby vyhrálo ANO před ODS. Mimo Sněmovnu by zůstali
lidovci i ČSSD (2023, April 14). iROZHLAS. https://www.irozhlas.cz/zpravy-domov/pruzkum-snemovna-model-
median_2304141200_mst
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Conclusion
The Czech society is increasingly discontent and radicalised. New civic initiatives as well
as political parties have emerged as a result and some of them have already succeeded in
shaping the public and media discourse. The political party PRO 2022, which was set up after
splitting from the national conservative Tricolour movement last year, organised two mass anti-
government rallies in Prague with the participation of several dozens of thousands of people in
March and April. The manifestations were attended by opposition politicians, union members
and respected experts, artists or sportsmen. The rallies called upon the government to support
a peaceful settlement of the war in Ukraine, stop to restrict fundamental rights and freedoms
and solve the bad economic situation urgently.
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The government representatives, however,
continue refusing a dialogue with the opposition, suspecting its leaders to act in favour of
Russia.
8
Na protivládní demonstraci se na Václavském náměstí sešly tisíce lidí (2023, March 11). ČTK.
https://www.ceskenoviny.cz/zpravy/2334981. Tisíce lidí zaplnily Václavské náměstí, pak zamířily ke Strakově
akademii. Někteří před ní plánují přespat (2023, April 16). iROZHLAS. https://www.irozhlas.cz/zpravy-
domov/vaclavske-namesti-protivladni-demonstrace-protest-jindrich-rajchl_2304161608_aur. Bartoníček, R.
(2023, April 17). Tisíce lidí v Praze demonstrovaly proti bídě. Rajchl promluvil u Úřadu vlády. Aktuálně.cz.
https://zpravy.aktualne.cz/domaci/jindrich-rajchl-demonstace-praha/r~07f3c516db4a11eda9eeac1f6b220ee8/
