As the coalition government moves to push a badly needed overhaul of the pension system through the lower house, fresh clouds have appeared on the horizon. It has emerged that the Czech Republic may have to pay Slovak pensioners who worked in Czech firms during the 73 years of a common state financial contributions to the tune of billions of crowns.
Photo: Mee Lin Woon / Stock.XCHNG
Amicable as it was the 1993 Velvet divorce between Czechs and Slovaks left some loose ends and one of the longer-term repercussions has now come to the fore. Eighteen years after the break-up, the average pension in the Czech Republic is 10,500 crowns per month–in Slovakia, which adopted the euro in 2009, it is the equivalent of 8,800. Czechs who spent years working for Slovak companies would thus have lost out by getting lower pensions and on the grounds of a Constitutional court ruling the Czech state has been making up for the difference. Now Slovaks who worked for Czech firms have jumped on the bandwagon and claim that they too should be eligible for higher pensions. The daily Lidové Noviny, which highlighted the gravity of the problem on Wednesday claims that the Czech state could end up paying Slovak pensioners billions of crowns in compensation. Reacting to the report, Prime Minister Petr Nečas admitted this was a serious problem.
“This is an ongoing problem. It is extremely serious and hypothetically speaking -in a worst case scenario - the Czech Republic stands to lose billions to tens of billions of crowns.”
Petr Nečas, photo: CTK
The question who is eligible for compensation has sparked a complicated legal dispute between Czech courts. When a Prague court acted on a precedent set by the Constitutional Court in the case of Czech pensioner Marie Landtova, the Supreme Administrative court overturned its ruling and the claimant took her case to a European court of law. The European court promptly alerted the Czech authorities to the fact that if they wanted to compensate their own citizens it would be discriminatory not to compensate citizens of other EU member states who had worked for Czech firms and were getting lower pensions in their home countries. This development could spark an avalanche of requests. The Slovak Ministry of Social Affairs says it gets dozens of telephone calls a day for advice on how to file compensation claims in the Czech Republic and a Bulgarian citizen has already taken his case to court.
Should this scenario materialize it could mean an extra burden of billions of crowns annually depending mainly on the future level of Czechs and Slovak pensions and the exchange rate of the crown to the euro. At this point it is not clear how many Slovak and other foreign pensioners could be eligible for the pension-boost. Czech judges and legal experts are at loggerheads over who should receive compensation. Judge Jaroslav Vlašín from the Supreme Administrative Court says every Slovak pensioner who retired after the break-up in 1993 and who worked for a Czech firm for at least 25 years should be eligible, while the Chairman of the Constitutional Court Pavel Rychetský claims that only Slovaks permanently residing on Czech territory should get compensated.
Photo: Štěpánka Budková
Some lawyers argue that the Czech government should reject the claims out of hand since it is legally on strong ground – and there is also the possibility of scrapping compensation money paid to Czechs, which would spark fresh lawsuits. At present the government is studying the legal implications and considering its options.
