Business News

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Trade Unions are planning mass protests against planned government reforms. Growth of national average wage outpaces both inflation and labour productivity. State budget deficit widens due to lower-than-expected tax revenues. Central Bank keeps interest rates unchanged, but opens the door to a possible future rate cut. Fixed-line telephone operators call for the interconnection tariffs between fixed and mobile networks to be reduced. New advisor for Unipetrol privatisation selected.

Trade unionists plan mass protest

In the week after the European Union referendum on June 13-14, about 100,000 workers and state employees plan to march through Prague to protest against the proposed public finance reforms. There are also plans to close some schools and reduce the operations of some hospitals for the day of the protest.

Average wage grows at a record pace in public sector

The national average wage grew by 7.4 percent year-on-year in the first quarter. Although wages in the public sector remain below those in the business sphere, they have risen by an unprecedented 14.5 percent, as compared to less than 6 percent growth in the private sector. Experts warn that such a steep growth can be sustainable only if accompanied by a proportionate increase in labour productivity, which, however, is not the case.

Budget deficit widens due to lower tax collection

The Czech state budget deficit widened to 75 billion crowns (2.8 billion USD) at the end of May from 64 billion at the end of April. The Finance Ministry said the deficit in May was caused by lower-than-forecast corporate income tax revenues, but that tax incomes are expected to flow better later in the year.

Central bank keeps interest rates unchanged, opens room for cuts

The Czech National Bank kept interest rates unchanged, as expected, at its monthly policy meeting last Thursday, but opened the door to a possible future rate cut by saying inflation risks have fallen. CNB Governor Zdenek Tuma said a range of factors - including Europe's sluggish economic revival, a weak dollar, and lower oil and farm prices - have lowered the outlook for price rises.

Fixed and mobile phone operators in dispute over interconnection tariffs

Domestic fixed-line telephone operators have been calling for the interconnection tariffs between fixed and mobile networks to be reduced. They claim the current tariff, set by the sector regulator in 2001, is higher than interconnection tariffs between the mobile networks, and as such discriminatory. Its reduction would ensure a fairer distribution of profits between mobile and fixed-line operators.

New advisor for Unipetrol privatisation selected

National Property Fund, the Czech privatisation agency, has selected a consortium of McKinsey & Co, WestLB and EEIP to advise the government on the sale of oil group Unipetrol. The sale of a 63 percent stake, valued by analysts at 8-10 billion crowns ($300-380 million), is planned for completion the end of this year.