At a time when unemployment is rising sharply, Labour Minister Petr Nečas is coming up with a revolutionary proposal for changes to the labour code. He wants to make firing and hiring workers easier for businesses.
The new labour code should come into force as of next year – that means at a time when Nečas says the crisis will fade away and companies will need an incentive to lose their fear to employ more people.
Nečas regards the code as his priority, but pushing it through will not be easy. It is clear already now that the opposition Social Democrats (ČSSD) and Communists will be against.
One-month notice period
“The crisis has shown that now much more than ever it is necessary to have a flexible labour market. The more flexible the labour market, the better we can fight with unemployment. We have to motivate employers, so that they do not fear to create new jobs in the instant that the situation improves a bit,” said Nečas.
Notice period would be shortened to one month, and severance pay would change as well. If a company is dismissing someone who worked for it for a long time, it would have to pay more. By contrast, newcomers would get little money. “Those who worked for one employer for less than three years would get a two-month severance pay, and whose who worked there for three-to-six years would get a three-month salary. Those who worked for a company for more than six years would get four monthly salaries as a severance pay,” Nečas said in an exclusive interview for HN.
Businesses will also be able to get rid of new employees easier. At present, firms can “probe” new staff in a three-month period before giving them a permanent employment contract, while the new legislation would extent the probation period to four months.
The probation period for managers and other key workers would be even six months. “Key workers have a bigger influence on the company’s operation, so employers must have more time to check their new manager,” said Nečas.
He would also like to extent permanent employment contracts to three years from the current two years. Employees would be given an opportunity to do contract work for 300 hours a year instead of the current 150 hours. And contract work, used for instance by women on maternity leave and seasonal workers in agriculture, involves one big advantage: there is no need to pay health and social insurance.
If a worker receives an interesting offer from a rival employer and has to take the new job immediately, he or she can pay the current employer and leave.
No employing of self-employed
Hiring employees to work based on their trade licence, known in the Czech Republic as švarcsystém, will eventually not be allowed even though Nečas was for such a solution. “Nobody is proposing to make švarcsystém legal now. I just said that I would not be against it. Cancelling it is not relevant any longer,” Nečas said.
Nečas will present the amendment to the Labour Code to the government by June. Before it happens, he wants to push through a “pro-family package” that would involve benefits for companies giving part-time jobs to women after maternity leave, people older than 55 years and disabled citizens.
Nečas’s proposal has come under harsh criticism from the ČSSD and trade unions who especially dislike the plan to cut the notice period from two to one month and to slash severance pay for some employees.
“It seems that Minister Nečas does not realize at all that such measures cannot be introduced in times of crisis. For example, cutting the notice period from two months to one means cutting the period of time during which one can search for a job. Nečas’s proposal will harm employees and we will not support anything like that,” ČSSD deputy chairman Zdeněk Škromach said.
Štěch: Let’s go into the streets
Milan Štěch, head of the Czech-Moravian Confederation of Trade Unions, is even harsher. “Minister Nečas probably thinks that it was employees who caused the current economic crisis. None of his proposals is acceptable. If Minister Nečas wants to make employees go into the streets, he will definitely achieve it thanks to this proposal,” Štěch said.
Nečas said the objections raised by the ČSSD and unionists are not surprising. “Their protectionist mentality goes against the interests of employees. Dozens of thousands will lose their jobs this year due to the crisis, and we cannot protect their jobs. But we can create new jobs that they will move to. And this is exactly what we want to achieve,” said Nečas.
Employers, on the other hand, said they welcome Nečas’s proposal. “It’s definitely a step in the right direction that will enable employers to take on and dismiss people faster,” said Jaroslav Míl, president of the Confederation of Industry of the Czech Republic.
Unions will be weaker
The amendment to the labour code would enable people to agree to being paid their wages in dollars or euros and would weaken the powers of trade unions.
Nečas will use the March 2008 statement by the Constitutional Court for the purpose. The court verdict says that unions can no longer suspend production if they have the impression that it endangers workers. Unions will no longer be able to check all labour law regulations in a company. And when union leaders from different associations within a company fail to reach an agreement, the company would no longer have to conclude a collective agreement with the strongest union organisation.
