Business News

In Business News: uncertainty remains about when the Czech Republic will introduce the euro, after the government approved an adoption plan - without a target date; the central bank surprised many with a second quarter-point interest rate hike in two months; the average salary was 7.4 percent higher in the second quarter than in the same period in 2006; changes to the labour code are intended to increase flexibility; power giant CEZ hooks up with Hungary's MOL; and Ikea plans to double its regional presence over the next decade.

Euro adoption plan approved - minus target date

Photo: European Commission

Recent uncertainty about when the Czech Republic will introduce the euro was not cleared up this week, with the cabinet approving an adoption strategy - without setting a target date for replacing the crown with the common European currency. However, Prime Minister Mirek Topolanek did say that a previously flagged target date, 2012, could be met, under certain conditions. Mr Topolanek promised an annual review of the matter.

National Bank raises interest rates for second time in two months

The board of the Czech National Bank this week surprised many by voting to raise the benchmark interest rate by a quarter of a percentage point to 3:25. It is the third quarter-point hike so far this year, and Czech interest rates now stand at their highest level in five years. However, they are still the lowest in the European Union.

Average salary up 7.4 percent in second quarter

The average salary in the Czech Republic stood at CZK 21,462 (just over USD 1,000) in the second quarter of this year - a rise of 7.4 percent on the same period in 2006. Taking inflation into account, the real wage increase was 4.9 percent. Analysts have attributed the rise to the much reported shortage of labour in many areas of the Czech economy.

Liberalisation of aspects of labour code gets broad backing

Photo: European Commission

Planned amendments to the labour code are set to liberalise rules which have been in place since just January. Those between 16 and 18 will be able to work a full 40-hour week, rather than the 30 currently permitted; Labour Minister Petr Necas says that discriminates against unqualified young people. The changes also allow for more flexible working time and make the payment of over-time simpler. Perhaps unusually, the plans have received the backing of all the main political parties, and the trade unions.

CEZ forms alliance with Hungary's MOL

The most profitable Czech company, power giant CEZ, is hooking up with Hungarian oil and natural gas concern MOL, in a new strategic partnership, it was announced this week. The alliance follows months of talks been the governments of the Czech Republic and Hungary, according to Hospodarske noviny. The CEZ-MOL deal is being seen as an attempt by two smaller states to reduce dependence on Russian energy supplies.

Ikea sales and customer numbers up 17 percent

The Swedish furniture giant Ikea says its sales in the Czech Republic rose by 17-percent in the year ending on August 31. Ikea's four stores in the Czech Republic also recorded a 17-percent increase in the number of customers served, said a company representative. The flat-pack pioneer is planning to double its number of outlets in the Czech Republic, Hungary and Poland in the next decade.