Czechia

Returning to moderate growth in the wake of the pandemic’s worst months, Czechia falls into the middle ranks (rank 22) in terms of economic policies. Its score on this measure represents a gain of 0.4 points relative to 2014.

While slow to introduce a large COVID-19 response package, the Czech government ultimately devoted considerable resources to stabilization, leading to fiscal deficits well above 5% in 2020 and 2021. The country’s GDP declined by about 5.8% in 2020, and returned to growth of about 3% in 2021.

Thanks to a low employment share in the services sector, Czechia’s unemployment rate proved comparatively stable during the pandemic, rising from 2.0% to a short-lived peak of just 3.5% in 2021. The country had previously been experiencing a severe labor shortage. Average wages have risen steadily, with exceptional growth in the health and social care sectors.

Total state debt remains manageable, having risen from 30% of GDP to about 42% in 2021. Fiscal consolidation is now on the agenda. The government has been criticized for failing to develop an economic strategy that does not rely on production by multinational corporations using imported components. Domestic R&D spending has stagnated at about 2% of GDP.

With a generally effective social system, Czechia receives middling scores with regard to social policies (rank 22). Its overall score on this measure remains unchanged relative to 2014.

The country’s healthcare system, financed through universal compulsory insurance, was pushed to the brink during the second COVID-19 wave. Life expectancy fell by a percentage point in 2020, more than in most EU states. However, digitization in the sector improved.

Educational outcomes are good, although the pandemic exacerbated inequalities, with some students left behind by online instruction. A significant share of Roma suffer from social exclusion, and the lack of affordable housing – along with the consequent homelessness – is becoming a more serious problem. Childcare availability is limited, contributing to a comparatively low employment rate among women.

The pension system appears largely sustainable, although reform remains on the agenda. Few resources are devoted to integration programs. Some politicians have encouraged hostility toward foreigners.

As a reluctant reformer in this area, Czechia scores relatively poorly (rank 30) in the area of environmental policy. Its score on this measure has declined by 0.7 points relative to 2014.

The country has been slow to increase energy efficiency and launch an energy transition. Renewables accounted for 16% of total consumption in 2019. The government plans to phase out coal by 2038, but this is to be replaced by gas. Nearly 40% of energy comes from nuclear power, and the country was a key figure in pushing for its classification as sustainable under EU rules.

A new set of strategic environmental objectives was adopted in 2021. However, governments have shown little previous commitment to improvement and cross-agency coordination in areas such as water management. Investigation into an ecological disaster on a major river in 2020 found no culprit, but experts said a company linked to the then-prime minister was likely involved.

Biodiversity is deteriorating due to agriculture and transport activities. The country often does the least amount possible to fulfill its EU environmental obligations. The government sought major changes to the EU Green Deal in order to protect the country’s automotive industry.

With the previous prime minister having sharply divided society, Czechia falls into the middle ranks (rank 23) in terms of democracy quality. Its score on this measure has declined by 0.6 points relative to 2014.

Media mogul Andrej Babiš served out his term as prime minister despite ongoing investigations into corruption allegations involving the misuse of EU funds. Babiš’ company dominates the daily print media, and benefited disproportionately from pandemic aid. The group’s publications have been biased against other political parties.

At the beginning of the pandemic, the government refused to publish COVID-19 information such as hospital bed vacancy rates. Media and NGOs used the freedom of information law to gain access to the data. Civil rights and political liberties are largely protected, although temporary COVID-19 rules limited these rights. Women and Roma people face persistent discrimination.

Drive-through voting was approved during the pandemic, and the new government has promised to institute postal voting. Legal changes during the initial phases of the pandemic were chaotic, and were frequently overturned by courts. Corruption and clientelism remain widespread.

With a government that has been strongly driven by the prime minister, Czechia scores relatively poorly (rank 33) with regard to executive capacity. Its score on this measure has improved by 0.1 point relative to 2014.

Medium-term and long-term strategic frameworks exist, but appear to have little policy influence. The government office has little sectoral expertise, instead playing a primarily coordinating function. Line ministries develop policies with input from the government office. The government paid little heed to expert advice during the pandemic.

Informal coordination between coalition members plays an important role. Communication has been streamlined but has been driven by the prime minster. The Babiš government’s lack of a parliamentary majority hampered passage of key policies. The government repeatedly failed to control the spread of COVID-19.

The RIA process is well-established, but many major proposals are excluded from its requirements. The Babiš government met with societal actors, but largely ignored their comments. A controversial income tax reform reduced subnational government revenues, reducing their ability to fund schools and hospitals. Regulations were often enforced against Babiš business opponents.

Despite its highly polarized media and political environments, Czechia falls into the upper-middle ranks (rank 15) with regard to executive accountability. Its score on this measure has gained 0.1 point relative to its 2014 level.

Newspaper readership rose during the pandemic. Media sources are strongly divided between pro- Babiš organizations and more balanced or anti-Babiš rivals. The online media offers a broader spectrum of views than the traditional media. Social media has contributed to the spread of misinformation and polarization, especially regarding vaccines.

Parliamentarians have considerable resources and strong formal oversight powers. The independent audit office closely scrutinizes the use of EU and other funds, as well as the operations of state entities. The most recent ombudsman has espoused controversial, legal dubious opinions on civil rights.

Decision-making in the former prime minister’s party is highly centralized, but other parties consult members more routinely. Economic interest groups have considerable resources and policy expertise. The broader civil-society sector is vibrant, with a mass protest movement having contributed to uniting the opposition to the Babiš government.