Monday, 23 May 2011

Czech Pension Plans Spark Protests

Around 50,000 trade unionists demonstrated in the Czech capital Prague on Saturday against the government's plans to further privatise the country's welfare system.

At the heart of the right-wing coalition's plans is the proposal to introduce a new "second pillar" private-sector pension scheme to compete with the state pay-as-you-go system. This blog has previously analysed the effects a simliar reform that was introduced in Poland at the end of the 1990s. As well as further repressing pensions and introducing more inequality into the system, it also contributed to a large increase in public debt.

In anticipation of such an outcome, the Czech government has simultaneously proposed a series of reforms to compensate for this loss of income. These include raising the pension age; creating an increased flat-rate of VAT; introducing a new wave of privatisations; increasing payments for health care and cutting social benefits. This means that large areas of the country's social services will be removed from the public sphere and made available for private profit.

The Czech trade unions are threatening a new wave of protests against the government's plans. The coalition government is already unstable and it is unclear whether it will be able to last the remaining four years of its term in office and push through these proposals. It plans to take them to parliament in June.

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